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Sign cost of living crisis is out of control: ‘There is still momentum’

The rising cost of fruit and vegetables has helped maintain Australia’s inflation rate at a 30-year high, fresh data has revealed.

The Australian Bureau of Statistics’ new monthly measure of inflation showed the pace of price rises hit 7.0 per cent in July before easing slightly in August, down to 6.8 per cent.

Soaring construction costs and fuel prices continue to be the key drivers, but the rapid uptick in the price of fruit and vegetables (up 18.6 per cent) added to the hip pocket pain.
“The largest contributors in the 12 months to August were new dwelling construction, up 20.7 per cent, and automotive fuel, up 15 per cent,” Australian statistician David Gruen said.

“The slight fall in the annual inflation rate from July to August was mainly due to a decrease in prices for automotive fuel.”

Overall, the cost of food and non-alcoholic beverages rose 9.3 per cent in the year to August.

The data release, the ABS’ first monthly update, is designed to give economists and policymakers more regular updates on inflation.

It will be officially launched next month, but Dr Gruen said it was a taste of what was to come.

Treasurer Jim Chalmers said there was no “sugar coating” that Australians were doing it tough.

“The new monthly consumer price data confirms what Australians know every time they pay a bill or visit a store – prices are rising and their wages just aren’t keeping up,” he said.
While the figures show inflation has eased, it won’t be enough for the Reserve Bank to hit the brakes on interest rate rises.

Over the last five months, the cash rate has risen from 0.1 per cent to 2.35 per cent in a series of aggressive rate rises designed to slow down inflation.

ANZ senior economist Catherine Birch said Thursday’s figures were unlikely to influence the central bank ahead of its meeting next week.

“Today’s data on job vacancies and the monthly indicator do not change our expectation that the RBA will hike the cash rate 50 basis points,” she said.

“There is still momentum on the inflation front.”
Australian household wealth has plunged for the first time since the beginning of the pandemic, down $484bn in the June quarter to $14.4 trillion.

Tumbling stock and property prices led to Australians being 3.3 per cent poorer than they were three months ago.

ABS head of finance and wealth Katherine Keenan said the fall “coincides with increased cost of living pressures and rising interest rates”.

Falling superannuation balances contributed 1.7 percentage points to the decline in wealth, while a slump in residential prices cut 1.1 percentage points from the household fortune.

But it’s not all bad news; super contributions rose to $38bn and household deposits rose 0.5 per cent ($7.4bn) during the quarter.

The ABS said those figures reflected the “ongoing strength” in the labour market.


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