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The latest CPI figure is expected to be critical in the RBA’s interest rate decision next week.
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Inflation eases in year to March
26 April 2023
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The annual inflation rate has eased to 7 per cent for the year to the end of March, driven by a slower rise in prices over the quarter of 1.4 per cent.
The result means CPI has fallen precipitiously from its 30-year high of 7.8 per cent over 2022 and is expected to be crucial in deciding whether the RBA changes interest rates next week.
“CPI inflation slowed in the March quarter with the quarterly rise being the lowest since December 2021,” said ABS head of prices statistics Michelle Marquardt.
“While prices continued to rise for most goods and services, many of these increases were smaller than they have been in recent quarters.”
The most significant price rises were medical and hospital services (up 4.2 per cent), domestic travel and accommodation (up 4.7 per cent), tertiary education (up 9.7 per cent) and gas and other household fuels (up 14.3 per cent).
The ABS said discounting on furniture, appliances and clothes resulted in a decrease in goods annual inflation, from 9.5 per cent to 7.6 per cent, after two years of steady increases. Automotive fuel prices had also gone down by 0.8 per cent for the quarter.
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However, the annual price of services rose by 6.1 per cent – the largest increase since 2001 – driven by higher prices for holiday travel, medical services, rents and restaurant meals.
Household fuels rose even higher, with the annual rise in gas prices of 26.2 per cent the largest on record, reflecting the quarter's rise as well as price reviews in the September quarter 2022.
For electricity, price rises in the September quarter 2022 were partially offset by the introduction of electricity rebates in Western Australia, Queensland and the ACT, the ABS said. The unwinding of these rebates had seen the full effects of higher electricity prices reflected in the March quarter.
Another bump came from education fees and health services.
“Prices for medical and hospital services typically rise in the March quarter as GPs and other health service providers review their consultation fees, and the Medicare Safety Net is reset at the start of the calendar year,” Ms Marquardt said.
“This year some private health insurance premiums also increased in January, adding to the price rise for medical and hospital services.”
“Tertiary education fees are also indexed at the start of the year. This quarter additional strength was seen in tertiary education as changes in student contribution bands and fees introduced in 2021 as part of the Jobs-ready Graduates Package continued to flow through to the index.”
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