Inflation was 2.7% in the year to August 2024, according to new figures from the Australian Bureau of Statistics (ABS).
The August 2024 figure, down from 3.5% in July, is the lowest monthly inflation rate since August 2021.
This does not mean prices are falling — it means they are increasing at a slower rate than before.
The ABS attributed the figure to a drop in electricity prices.
What is inflation?
Inflation measures price growth.
The ABS summarises prices in around 90 categories (e.g. fruit, rent, furniture) to calculate the figure.
When inflation is high, your money buys less.
The Reserve Bank of Australia has set a target of 2-3% annual inflation. It adjusts the ‘cash rate’ – what it charges banks for short-term loans, which flows through the rest of the economy – based on the rate of inflation.
Electricity
Electricity saw the biggest drop in cost last month, falling by 17.9% in the year to August.
In July this year, the Federal Government announced it would give households up to $300 in energy bill rebates. The Qld, WA, and Tasmania Governments have also announced similar rebates.
ABS head of price statistics Michelle Marquardt said that without the Government rebates, “electricity prices would have risen 0.1%” in the 12 months to August.
Housing
The housing rate covers rent, new home purchases, electricity, gas, and household fuels.
Housing costs rose by 2.6% in the 12 months to August, compared to a 4% rise in the 12 months to July.
Rents dropped by 0.1% from July, while new home prices rose by 0.1%.
Adjustments
Inflation for the year to August 2024 excluding items with volatile prices – including fruits, vegetables, fuel, and holidays – was slightly higher at 3%.
Marquardt said inflation was the lowest it’s been since August 2021.
