A day after Treasurer Jim Chalmers lauded Australia’s economic recovery and a “soft landing” in his budget speech, fresh inflation data from the Australian Bureau of Statistics (ABS) reinforced his confidence.
The latest Consumer Price Index (CPI) figures show headline inflation slowed to 2.4 percent over the 12 months to February, down from 2.5 percent in January, now sitting within the Reserve Bank of Australia’s (RBA) target range of 2-3 percent.
“Annual CPI inflation was slightly lower in February, after holding steady at 2.5 percent for the previous two months,” said Michelle Marquardt, ABS head of price statistics.
Core inflation, which strips out volatile items, dipped from 2.9 percent to 2.7 percent, while RBA’s preferred measure of underlying inflation, the trimmed mean, also declined to 2.7 percent.
Housing and Energy Prices Drive Slowdown
Key contributors to the easing inflation rate include falling electricity prices and slower rental growth.Data reveals that housing inflation eased to 1.8 percent in February, down from 2.1 percent in January, largely due to falling electricity prices linked to Commonwealth Energy Bill Relief Fund rebates in Victoria.
Rental price growth also slowed to 5.5 percent, the lowest since March 2023, in line with increasing vacancy rates.
New dwelling prices rose just 1.6 percent, the weakest growth since May 2021, as builders introduced discounts and incentives.
Electricity prices fell 2.5 percent nationally, with Victoria’s rebates contributing to a sharper 13.2 percent annual decline.
Without government rebates, however, prices would have fallen less, according to the ABS.
Chalmers vs. the Opposition
Chalmers welcomed the data, calling it “more positive and promising news that shows we’re making progress together in the fight against inflation.”He noted that both headline and underlying inflation had remained below the RBA’s target midpoint for several months.
“The Budget we handed down this week continues the fight against inflation and shows that Treasury now expects inflation to return sustainably to the target band six months sooner—in the middle of this year, rather than at the end,” he said.
However, Shadow Treasurer Angus Taylor dismissed the government’s optimism, arguing Australians have seen an 8 percent decline in their standard of living over the past two and a half years.
“The Reserve Bank Governor called it homegrown, and we see grocery prices up 30 percent, energy prices—gas and electricity—up over 30 percent, insurance bills, mortgage costs … all rising,” Taylor said.
While inflation is moderating amid a cost-of-living crisis, the debate over economic management continues.
