Australia's annual inflation rate fell to 3.5% in the year to July
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Loading... - Anton Cornelius
- 28 Aug 2024
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Australia's annual inflation rate fell to 3.5% in the year to July, its lowest level since March, as federal government energy subsidies helped reduce electricity bills by 5%, according to the Australian Bureau of Statistics. This marks a decline from the 3.8% inflation rate recorded in the 12 months to June, though the figure slightly exceeded economists’ predictions of 3.4%, suggesting that any potential interest rate cuts might still be some time away.
Energy prices played a significant role in the drop, with national electricity prices falling 6.4% in July alone, thanks to billions of dollars in government rebates that particularly benefitted Western Australia, Queensland, and Tasmania. Without these rebates, energy prices would have increased by 0.9% instead.
However, inflationary pressures persisted in other areas. Fruit and vegetable prices surged by 7.5% in July, up from a 3.6% rise in June, and alcohol prices saw a 3.7% annual increase, up from 3.4% the previous month. These price hikes prompted the Australian Council of Trade Unions to call on major supermarkets to reduce prices after Coles and Woolworths posted profits of $1.1 billion and $1.7 billion, respectively. ACTU assistant secretary Joseph Mitchell criticized the supermarkets, stating, "[They] post megaprofits while working people struggle. It’s time they do their part and drop prices."
Despite these price increases, inflation eased when excluding the temporary spike in food prices and the drop in energy costs. The trimmed mean inflation indicator fell to 3.8% in July from 4.1% in June, while measures excluding volatile spending reached their lowest levels since January 2022, at 3.7%.
Treasurer Jim Chalmers attributed the reduction in inflation to government subsidies, while economists noted a broader slowdown in price rises. "Disinflation broadened in July and was not solely due to government rebates," said CBA economist Stephen Wu, highlighting a general cooling of inflationary pressures across the economy.
