Public Transport Subsidies and Taxpayer-Funded Rebates Lead to 3-Year Low in Inflation
Despite falling within the target 2 percent range, the RBA chief has already cautioned that this level of inflation may only be temporary.
August saw inflation drop to its lowest point in three years.
The most recent data from the Australian Bureau of Statistics shows a decrease in annual headline inflation to 2.7 percent last month, down from 3.5 percent in July.
This is the first time since October 2021 that inflation has fallen within the Reserve Bank of Australia’s target range of 2 to 3 percent.
RBA Governor Michele Bullock indicated on Sept. 24 that government relief measures would impact headline inflation.
Freebies at Work
In July, Australians benefited from reduced electricity bills thanks to the government’s $75 energy rebate, resulting in a 17.9 percent overall reduction in electricity prices, according to ABS data.
Transport costs also saw a decline, with a 1.5 percent drop in the 12 months leading up to August 2024, largely due to cheaper or free public transport schemes in certain cities.
In August alone, urban transport fares decreased by 5.2 percent.
The decrease in fuel prices globally contributed to the drop in inflation, with automotive fuel prices 7.6 percent lower compared to August 2023.
No Relief in Housing and Food Sector
Housing costs have continued to rise, with new homes and major renovations increasing by 5.1 percent over the past year.
Rents also saw a 6.8 percent increase, primarily due to limited rental properties in major cities.
Food and non-alcoholic beverage prices rose by 3.4 percent, with fruits and vegetables seeing a significant price jump of 9.6 percent.
Eating out and takeaway costs increased by 2.9 percent, while dairy products saw a slight decline.
Cost of Travel Up
Holiday travel and accommodation prices rose by 2.8 percent in the 12 months leading up to August, indicating a shift in the holiday market.
RBA Governor Bullock cautioned that while inflation may temporarily improve, it does not indicate sustainable control within the target range.
Inflation is expected to rise again once government support measures end, with stability anticipated by mid-2026.
