Australia’s inflation rate recorded a rise of 0.6% over the December quarter, bringing inflation to 4.1% for the year to December 2023.
Encouragingly, this is a significant decline from the 5.4% recorded in September and below market expectations.
Driving this result is the furnishings, household equipment and services (-1.0% quarter-on-quarter) and transport (-0.2%) groups, both of which recorded a price decrease over the quarter. On the flipside, housing (+1.0%), alcohol and tobacco (+2.8%) and insurance and financial services (+1.7%) continue to be the primary drivers of inflation across the country.
The news is even better in Perth, with annual inflation now just 3.6%, down from 5.8% recorded in September.
While this might seem like a substantial fall, this is in part due to impact of the State Government’s electricity subsidy in 2022 finally being rolled out. Nonetheless, this result will be welcomed by households and should see the Reserve Bank hold the cash rate steady when it kicks off its first meeting for the year next week.
Nickel prices plunge
Commodity prices have also made headlines over the past fortnight, with the price rout experienced by nickel and lithium contrasting the performance of iron ore.
The price of nickel has plunged 46% in the past 12 months alone, while lithium prices have plummeted a staggering 80% in the same period. A significant ramp up in supply from Indonesia has largely been the driving force behind softer nickel prices, while softer than expected electric vehicle demand combined with a supply glut of lithium has been the main driver there.
While this is clearly causing pain for those impacted, the elevated iron ore price continues to buoy WA’s resources sector.
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