The monthly Consumer Price Index (CPI) indicator rose 2.1 per cent in the 12 months to October 2024, according to the latest data from the Australian Bureau of Statistics (ABS).

Michelle Marquardt, ABS head of prices statistics, said: “Annual inflation was steady at 2.1 per cent in October and remains the lowest annual inflation since July 2021.” 

The top contributors to the annual movement at the group level were Food and non-alcoholic beverages (+3.3 per cent), Recreation and culture (+4.3 per cent), and Alcohol and tobacco (+6.0 per cent). 

Annual CPI inflation has fallen from 3.8 per cent in June to 2.1 per cent in October due, in part, due to significant price falls in Electricity and Automotive fuel. Electricity fell 35.6 per cent in the 12 months to October, which is the largest annual fall in the electricity series ever recorded in the CPI. Automotive fuel prices fell 11.5 per cent over the past 12 months after repeated price falls in recent months. 

“The falls in electricity and fuel had a significant impact on the annual CPI measure this month. When prices for some items move by large amounts, measures of underlying inflation like the CPI excluding volatile items and holiday travel, and the Trimmed mean can provide additional insights into how inflation is trending,” Ms Marquardt said. 

“Annual trimmed mean inflation was 3.5 per cent, up from 3.2 per cent in the previous month and similar to where it was in August. The CPI excluding volatile items and holiday travel was 2.4 per cent in the 12 months to October, down from 2.7 per cent in September.”

Housing rose 0.2 per cent in the 12 months to October, down from a 1.6 per cent annual rise to September. The large fall in electricity prices mostly offset higher rents and new dwelling prices.

“The annual rise in Rents of 6.7 per cent was partly offset by an increase in Commonwealth Rent Assistance (CRA). The maximum rate available for CRA rose by 10 per cent in September 2024 on top of the usual CPI indexation on 20 March and 20 September. Without the CRA changes, Rents would have risen by 8.1 per cent in the 12 months to October,” Ms Marquardt said. 

New dwelling prices, which capture new builds and major renovations, rose 4.2 per cent in the 12 months to October. Growth in new dwelling prices has slowed in the past two months due to lower demand, with dwelling prices rising at the lowest annual rate since August 2021.

Electricity fell 35.6 per cent in the 12 months to October. This was due to the combined impact of Commonwealth Energy Bill Relief Fund rebates and State Government rebates in Queensland and Western Australia.

“Commonwealth government and State government rebates continue to reduce household out-of-pocket expenses for electricity, leading to a 12.3 per cent fall in electricity prices in the month of October. This follows large falls in the previous three months since the introduction of the rebates,” Ms Marquardt said. 

Annual inflation for Food and non-alcoholic beverages was steady at 3.3 per cent in October.

Fruit and vegetables rose 8.5 per cent in the 12 months to October driven by lower supply of avocados, berries, and vegetables like cucumber and broccoli.

As foreshadowed in the ABS’ media statement last week, out-of-pocket child care costs have been corrected as part of compiling the October 2024 monthly CPI indicator. The ABS made errors in estimating the impact of the Government’s reforms to the Child Care Subsidy when they took effect in July 2023.

The correction applied this month reduced the Child care index by 5.8 per cent and reduced the Preschool and primary education index by 0.4 per cent. The correction of child care costs meant the rise in annual CPI inflation was 0.05 percentage points lower than it would otherwise have been without the correction, and the annual trimmed mean was 0.02 percentage points lower than it would otherwise have been.