Australian CPI inflation lifted off a 17-month low increasing to 5.2% in August from 4.9% in July, largely reflecting a spike in petrol prices. While this comes as an untimely elevation going into next week's RBA meeting, the underlying inflation gauges were flat to slightly softer in August.
Petrol prices recorded their fastest monthly rise (9.1%) since May 2022, pushing up the 12-month headline inflation rate from 4.9% to 5.2%. Nonetheless, the bigger picture is that inflation is well down from the 8.4% peak at the end of last year, and that disinflationary process continued to play out in the September quarter. The past two monthly reports indicate that inflation is on track to come in a little above 5% (year-ended) in the detailed quarterly series in Q3, down from 6% in the June quarter.
On an underlying basis, inflation held at 5.6% on the trimmed mean measure while it eased from 5.6% to 5.3% for CPI excluding volatile items (petrol, fruit and vegetables). These latest readings compare to their respective late 2022 peaks of 7.2% and 8.3%.
Mainly due to the effect of higher petrol prices, goods inflation lifted from 4.4% to 5.1%yr. Services inflation remains more elevated but held at a 5.6%yr pace. Factors contributing to the faster pace of services inflation include rents (7.8%yr) and holiday travel and accommodation (6.6%yr).
