THE SQUIZ

In what feels like some rare good news for the Aussie economy, new data from the Bureau of Stats shows that inflation bucked expectations in October by easing slightly. The monthly consumer price index (CPI) – a measurement of how much we pay for stuff – rose 6.9% over the year to October, down from September’s 7.3% headline rate. It was surprising as experts had predicted inflation would go up and has sparked hope that price rises and inflation may have peaked, or at least be nearing the peak. But Treasurer Jim Chalmers says while he’s “cautiously optimistic”, we’re still yet to feel the full impact of floods and the Ukraine conflict.

WHAT’S CAUSED THE DROP?

An easing of the price of fruit and veg was a key factor, as was a decrease in the cost of clothes and shoes. And perhaps most surprisingly, travel price increases dropped from 12.6% to 3.7%. Not everything got cheaper, though… By far, the biggest contributor to the annual rise was new homes at 20.4%, which ABS boss Michelle Marquardt says is down to “ongoing shortages of labour and materials”. Renters didn’t fare much better as rents went up from 2.9% to 3.5%. Fuel prices also increased from 10.1% to 11.8% after the government’s temporary cut to the fuel excise ended. It’s also worth noting the latest figures don’t include power bills which jumped 15.6% last quarter. And because this is only the 2nd monthly CPI data release from the ABS – which they previously released quarterly – these figures carry less weight. 

SO THE ECONOMY’S ALL GOOD NOW?

Not quite… even if inflation has peaked, we’re still way above the official target of 2-3%. The results also follow a warning from Deutsche Bank predicting that a global recession is looming as governments worldwide struggle to control inflation. Many Aussies are also still feeling the pinch, as paying significantly more for goods than this time last year is no small matter. Perhaps the biggest indicator of how our economy is going will come next Tuesday when the Reserve Bank announces its monthly interest rate decision. Some experts say the decrease could encourage the RBA not to raise rates by more than 0.25% to 3.1%, or better yet, even pause future rate hikes. Fingers crossed…