The first inflation figures for January 2023 show some evidence of price growth (inflation) slowing. Prices increased 7.4% from January 2022 to January 2023, compared to 8.4% from December 2021 to December 2022. This means it slowed in the first month of this year.
Inflation can fluctuate from month to month so no definitive conclusions can be drawn, but Treasurer Jim Chalmers says the government is “cautiously hopeful” it has now peaked.
Prices for fruit and vegetables, dairy, clothing, and travel fell in the month of January, while housing and fuel rose but more slowly. However, all of these categories have risen significantly over the last year. Food prices have grown 8.2%, housing costs (including rent) 9.8%, and recreation activities 10.2%.
Detailed inflation figures are calculated every three months. Monthly figures don’t track as many prices and are more volatile (they can move up and down from month to month). This is why the Australian Bureau of Statistics usually presents monthly figures as a comparison to the same month from the year before rather than from one month to the next, which can give a misleading picture. The January result is lower than the December result, but is still the second-highest result since monthly collection began in 2018.
Treasurer Jim Chalmers noted the need to be “cautious and careful about interpreting the monthly outcome” but said it was “more evidence that inflation is likely to have peaked in our economy and the worst when it comes to inflation is behind us”. He also acknowledged that the latest figures for economic growth, also released today, were “an unfortunate sign of the times” and signalled a “challenging year” ahead. (The economy grew in the last three months of 2022 but by less than expected).