Al-anwar Newspaper English news in Australia
Inflation rose 6.8 per cent in the 12 months to February, suggesting Australia’s economy is on the track to normalisation.
It’s the second consecutive month of lower annual inflation after the 8.4 per cent peak in December and the 7.4 per cent rise in the 12 months to January – but the figure is still well above the Reserve Bank’s aim of 2 to 3 per cent.
The Reserve Bank will be looking closely at the latest data – released on Wednesday by the Australian Bureau of Statistics – when it meets next week to consider whether to raise interest rates for the 11th consecutive time.
The most significant contributors to the annual inflation increase to February were housing (up 9.9 per cent), food (8 per cent), transport (5.6 per cent) and recreation and culture (6.4 per cent).
ABS head of statistics Michelle Marquardt noted the annual increase for the housing group was lower than January (10.4 per cent).
“New dwellings grew 13.0 per cent in the 12 months to February which is the lowest annual growth since February 2022 as price rises for building materials continue to ease. Rent prices rose again due to the tight rental market, maintaining the 4.8 per cent annual growth recorded in January,” she said.
Grocery prices have surged over the last year, with an annual rise of 12.5 per cent for bread and cereal products and a 14.3 per cent rise for dairy and related products.
Power prices were up 17.2 per cent compared with a year ago.
The latest inflation figures come a day after the retail trade numbers revealed a stagnant 0.2 per cent rise in February – well down from January’s 1.8 per cent rise.
Year-on-year, retail trade was up 6.4 per cent.
The inflation figures are the last major piece of data ahead of the RBA board’s next meeting on Tuesday.
Given the annual inflation figure was well down on the market expectation of 7.2 per cent, economists are predicting RBA governor Philip Lowe and the board will keep interest rates as they are – 3.6 per cent – for at least this month.
Greens economic spokesperson, Nick McKim, said the RBA needed to “act in the best interests” of Australians by pausing rate rises.
“Rate rises were never the right tool to tackle this bout of inflation. And now that inflation is coming down, the rate rises must stop,” he said.
“Next week we will see if the RBA is finally prepared to act in the best interests of Australians instead of blindly following the rest of the world towards a recession.”
The Australian Chamber of Commerce and Industry has cautiously welcomed the pattern of deflation.
“While still too high, it appears inflation has now peaked and is beginning to return to more sustainable levels,” ACCI chief executive Andrew McKellar said.
“In reaching a decision at its April meeting, it’s critical that the Reserve Bank pause and take stock of the cumulative tightening that’s already in the system.
“Just like households, small businesses are feeling the pinch of rising rates and are yet to experience the full effect of a 3.5 per cent increase in just 10 months.”
