Cost for other goods are being driven higher because of rising energy prices.
Rising fuel and transport costs are having a widening impact on the Australian economy and have pushed trimmed mean second quarter inflation – the measure preferred by the Reserve Bank of Australia – up to an annualised 4.9% to the highest level this century.
Michelle Marquardt, the program manager at the Price Division at the Australian Bureau of Statistics, told MNI the sharp increase in trimmed mean inflation “reflected that the price rises covered a wider range of goods and services.”
“When you trim the data there is not much of a difference as there often is,” said Marquardt, (see: MNI BRIEF: Australian CPI At 6.1%, Lower Than Most Forecasts).
“Across the goods space, this reflects the increased pressures from transport costs and supply chain disruptions," she said. “What is different with this quarter is that the majority of things went up and it was largely only categories such as childcare which went down, because of a government rebate, and urban transport fares because of free travel in Sydney and Hobart.”
LOWER FUEL COSTS MAY HELP
Marquardt said that falling fuel prices would likely be passed through to other categories if they were passed on by business, cooling overall inflation.
While CPI inflation came in slightly less than forecast at 6.1% in the second quarter, up from 5.1% in Q1, trimmed mean inflation jumped from 3.7% to 4.9%. The RBA target range is 2% to 3%, (See: MNI INSIGHT: RBA Confident Of Avoiding Recession As Econ Cools).
Overall transport costs were up by 13.1% year on year while automotive fuel surged 32.1%, down slightly from 35.1% in the second quarter. The 2022 fuel price hikes are the steepest since Iraq’s invasion of Kuwait sent prices higher by 36.6% in 1990.
The Reserve Bank of Australia board meets next Tuesday to discuss interest rates, with the focus squarely on fighting inflation. The RBA is expected to hike by 50 basis points from the current 1.35% level.