Absolutely nothing in the September quarter consumer price index for markets, although the core or underlying inflation rate remains too low for comfort for the Reserve Bank and increases the chances of a rate cut next Tuesday and other easing measures.
Consumer prices rose 1.6% in the three months to September, well short of the 1.9% slide in the June quarter and underlining the weak nature of price pressures in the economy.
That is the real concern for the RBA. There remain patches of disinflation and deflation in sections of the economy that are not going away.
The rise produced an annual rate of 0.7% for the September quarter which was better than the historic 0.3% fall for the financial year to June 30.
The rise was expected with the end of free childcare and higher oil prices the major reasons for the rise, which were well-forecast.
The Reserve Bank’s preferred measures of inflation showed small rises. The trimmed mean rose 0.4% quarter on quarter to an annual rate of 1.2% while the weighted median rose 0.3% to 1.3%.
The average underlying quarterly rate was 0.35% and the average annual rate was 1.25%, half the 2% to 2% target range that the RBA is now pushed aside for the time being.
The inflation rate was actually smaller than that – excise on tobacco and alcohol was up 8.1% in the year to September and 1.6% quarter on quarter. Without that the annual rate would have been closer to 0.5%.
Explaining the data, ABS’ head of prices statistics, Andrew Tomadini, said the end of free childcare was the major factor in the result.
“In the September quarter childcare fees returned to their pre-COVID-19 rate, having been free during the June quarter. This was the largest contributor to the consumer price index (CPI) rise in the September quarter,” he said.
“Excluding the impact of childcare, the CPI would have risen 0.7 percent.”
Outside of childcare, there was a 9.4% lift in petrol prices while there was an 11.1% increase in costs of pre-school and primary education costs.
Furniture prices rose by 6.4% while there were spikes in major appliances (5.3%) and small appliances (5.8%).
“Strong demand and supply shortages led to price rises and less discounting for many household durable goods,” Mr Tomadini explained.
Despite the rebound in the September quarter, inflation pressures remain muted.
Over the past year, prices for clothing and footwear (minus 0.5%), housing (minus 0.2%), household furnishings (minus 0.1%), transport (minus 0.4%), communication (minus 3.3%) and recreation and culture (minus 0.7%) all fell.