The Australian Bureau of Statistics (ABS) has reported that the monthly Consumer Price Index (CPI) grew 4.3 percent in the year to November 2023, down from 4.9 percent in the previous month. The slowing growth in inflation has raised hopes of another Reserve Bank of Australia (RBA) interest rate pause in February. This latest figure indicates the smallest annual increase in the past two years. Excluding volatile items, the monthly CPI indicator still shows an annual rise of 4.8 percent.
The main drivers of inflation in November were housing (up 6.6 percent), food and non-alcoholic beverages (up 4.6 percent), insurance and financial services (up 8.8 percent), and alcohol and tobacco (up 6.4 percent). The government’s cost of living measures have eased the pressure of price growth in housing and electricity, according to the ABS.
Many economists believe that the RBA will keep the interest rate on hold for another month as inflation slows down. Some forecasts point to a possible shallow easing cycle starting in late 2024. Other economists suggest that a core inflation indicator below 5 percent would strengthen expectations of a 2024 interest rate cut. The drop in the monthly CPI has been noted by Treasurer Jim Chalmers as a welcome and encouraging progress. However, the shadow Treasurer Angus Taylor expressed concern at the Australian economic downturn and accused the Labor government of failing to address the economy’s challenges.