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The monthly Consumer Price Index (CPI) indicator rose 2.3 per cent over the 12 months to November 2024, increasing from the 2.1 per cent rise recorded in October, the Australian Bureau of Statistics (ABS) has revealed.
According to the ABS, food & non-alcoholic beverages (2.9 per cent), alcohol & tobacco (6.7 per cent), and recreation & culture (3.2 per cent) were the largest contributors to the annual CPI movement.
However, this was partly offset by annual declines in electricity (21.5 per cent) and automotive fuel (10.2 per cent).
ABS head of prices statistics, Michelle Marquardt, said the annual CPI rise was partly due to “the timing of electricity rebates”.
“In some states and territories, households received two rebate payments in October in lieu of not receiving a payment in July,” Marquardt said.
“From November most households received one payment. As a result, electricity prices fell 21.5 per cent in the 12 months to November, compared to a fall of 35.6 per cent to October.”
Despite the monthly lift, annual trimmed mean inflation continued to moderate, falling from 3.5 per cent in October to 3.2 per cent in November. According to Marquardt, annual trimmed mean inflation remained higher than CPI inflation due to the removal of large price falls from electricity and automotive fuel.
The timing of payments of electricity rebates also resulted in a rise of 1.2 per cent in the housing group in the 12 months to November, up from a 0.2 per cent annual rise to October.
“Electricity rebates lower the price of electricity for households. The impact of the rebates was lower in November than October due to the timing of payments,” Marquardt said.
“Most quarterly electricity bills received in November included only one instalment of the Commonwealth Energy Bill Relief Fund, whereas many bills received in October included two instalments. As a result, electricity prices rose 22.4 per cent in the month of November.”
Krishna Bhimavarapu, APAC economist at State Street Global Advisors, said that they “can now confidently said that disinflation is running apace in Australia”.
“The annual trimmed mean (3.2 per cent) continued moving towards the RBA’s target band, and on a more encouraging side, inflation in the new dwellings category was the weakest since mid-2021,” Bhimavarapu said.
Callam Pickering, APAC economist at global job site, Indeed, said the market is convinced that rate reductions will occur early this year; however, more progress with regard to service sector inflation would be required and “ideally some indication that productivity growth is improving”.
“Not enough progress has been made on that front for the RBA to be confident in their ability to a) return to their 2-3% inflation target and more importantly b) stay there,” he said.
“That trimmed mean inflation eased a little in November is a good sign. It’s a step in the right direction. But more progress is needed.”
Pickering added that an early 2025 cut remains unlikely, with a cut in May being the earliest probable time for rate relief.
Similarly, Bendigo Bank chief economist, David Robertson, said while the inflation data was once again supportive of RBA rate cuts in the first half of the year, “more constructive data” in the coming weeks is needed to support a February cut.
“The November data had a better cover of services inflation than the previous month, however the timing of government subsidy payments continues to distort the numbers, so we need to see the full quarterly data (released on January 29) before we can draw any firm conclusions,” Robertson said.
“Labour markets remain another key factor for the inflation outlook so the December jobs data to be released next week will also be critical.
“We continue to forecast three cuts this year although still expect the first to be in May, by which time we hope the RBA has enough evidence to reduce rates by 35 basis points to an even 4 per cent.”
[RELATED: NAB predicts 3 interest rate cuts for 2025]
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