ABS Details On Q2 CPI

The ABS note that "rising fuel prices accounted for much of the increase in the June quarter CPI, with prices surpassing pre-pandemic levels". Medical and hospital services also rose (+2.4%) due to "the annual increase in private health insurance premiums." Electricity prices (+3.3%) also rose due to "the continued unwinding of the Western Australian Government's $600 electricity credit." The ABS also flagged that "price rises were seen across a range of food items due to a variety of factors." Motor vehicle prices rose (+2.2%) due to "increased demand combined with supply constraints such as the global semi-conductor shortage."

• The ABS also noted that "government support schemes continued to be a factor in the June quarter. Prices for new dwellings fell (-0.1%) due to the continued impact of the Federal Government's HomeBuilder grant and similar grants by the Western Australian and Tasmanian state governments. Ms Marquardt said: "Without the offset from these housing grants, new dwellings would have risen by 1.9% due to demand-driven increases in material and labour costs."
• "The annual CPI movement was significantly influenced by COVID-19 related price changes from this time last year. Key drivers included the full unwinding of the Federal Government's free childcare package implemented in the June quarter last year, as well as a full return from the drop in fuel prices seen in the same quarter. These 'base effects' led to a sharp increase in the annual CPI movement."
• "In situations such as this, it is useful to consider underlying inflation measures such as the trimmed mean, which are designed to remove large, one-off price impacts."
• "Additional context can be gained by comparing the current CPI to pre-pandemic levels in the March 2020 quarter. Over the five quarters from the March 2020 quarter to the June 2021 quarter, inflation rose 1.9%."