Don’t be fooled: inflation is as high as ever on these essentials | Really Simple Money
You probably haven’t noticed, but inflation has apparently peaked and we can hope for some more relief next year.
The Australian Bureau of Statistics released monthly inflation data for October this week and it contained some welcome news – CPI inflation has fallen from 7.3% to 6.9%.
As is usual in these data releases, the devil is in the detail. The final CPI number is made of a big basket of goods and services and if you look closely you can seen the winners and losers in the trend.
Unsurprisingly, we are still hurting at the petrol pump. Fuel price inflation is running at 11.8% year on year. That’s right, its costing you 11.8% more to fill up your car than it was a year ago. Blame the most recent increase on the scrapping of the Government excise subsidy, with some blame on Vladimir Putin.
The other big factor which went against the lower trend was the purchase of new houses by owner occupiers. While the price of established dwellings is moving lower, construction costs mean that people buying new homes are paying a whopping 20.4% more than they were a year ago.
For all the publicity, and real life experiences, rents increased a moderate 3.5%.
Fruit and vegetables are up 9.4%, but there is some good news here because only last month the year on year increase was at 17.4%. Let’s hope that the recent resurgence in natural disasters doesn’t reverse that trend for the worse again.
There is good news if you want to take a holiday. Prices have been stratospheric this year, as anyone who has booked an airfare will know, but the ABS data shows that the cost of accommodation and travel rose only 3.7% in October, well down from 12.6% the previous month.
There’s also some price relief is you buy a bottle of wine, a pair of shoes, or – and we are not advocating this – a packet of cigarettes.
So, how low can inflation go in the next year or two. In its recent Statement on Monetary Policy the Reserve Bank forecasts it will be down to 3.2% by the end of 2024, just outside its 2% to 3% target range.
Let’s all hope that the RBA is right, although based on recent form their forecasts have been way off. Remember when Governor Philip Lowe said they wouldn’t raise interest rates until 2024?
Regardless of the RBA, we’ll have a good idea of where things are going this time next month when we get an inflation update because the ABS has moved from quarterly to monthly reporting.