Prices rose (Inflation) by 3.6% in the 12 months to March 2024, new figures from the Australian Bureau of Statistics show.
This has dropped from the 4.1% inflation rate recorded in the 12 months to December last year.
Inflation has been falling since its peak of 7.8% in December 2022.
What is inflation?
Inflation measures price growth. It uses prices in around 90 categories (e.g. fruit, rent, furniture) to measure this.
Falling inflation does not mean prices are falling — it means prices are still increasing, but at a slower rate than they did previously.
Today’s figure is measured compared to a year ago, so prices were 3.6% higher this March than they were last March.
Today’s figures
This time last year, the quarterly inflation rate was 7%.
That inflation rate has nearly halved to 3.6% in March 2024, which is still higher than what some economists had predicted.
Rising prices were largely driven by the increased cost of education, health, and housing.
The ABS said: “Rental prices rose 2.1 per cent for the quarter in line with low vacancy rates across the capital cities. Rents continue to increase at their fastest rate in 15 years.”
Interest rates
Inflation is a key consideration for the Reserve Bank of Australia (RBA) when it determines changes to the cash rate — the interest rate it charges commercial banks for short-term loans, which is usually then passed on to customers.
The RBA wants inflation to get to 2-3%. To do this, it has increased interest rates. The idea is that this takes money out of circulation, taking pressure off prices and reducing inflation.
The current cash rate is 4.35%. It was 0.10% at the start of 2022.
