The annual rate of inflation has slowed to 2.3 per cent, helped by a 5.1 per cent drop in electricity prices.
It may now be cheaper to turn on a light to get a better look at your grocery bill, but you may not be happy with what you see.
As widely expected, the Abbott government’s scrapping of the carbon tax has resulted in a large drop in electricity prices and helped reduce the annual rate of inflation to its lowest level in a year.
But food prices saw the biggest rise in the September quarter, led by a 14.7 per cent surge in fruit prices.
The consumer price index – in its first reading since the carbon tax’s demise – rose 0.5 per cent in the September quarter, slightly higher than economists expected.
The annual inflation rate eased to 2.3 per cent, the lower end of the Reserve Bank’s 2-3 per cent target.
It touched three per cent in the June quarter.
The Australian Bureau of Statistics says electricity prices fell 5.1 per cent in the quarter.
Finance Minister Mathias Cormann says that’s the single largest quarterly fall in electricity prices since ABS electronic records began in September 1980.
“Scrapping the carbon tax was always about reducing cost of living pressures and passing the savings onto families and businesses,” Senator Cormann said in a statement.
Economists, however, believe electricity companies could have cut the bills further, considering prices rose 15.3 per cent when the tax was introduced in 2012.
“We were looking for a larger decline than that, mainly because of the carbon tax repeal implications,” JP Morgan economist Tom Kennedy said.
“But the unwinding of the carbon tax will take more than one quarter.”
Opposition Leader Bill Shorten says Australians are still concerned their cost of living is going up, not down.
“We all know we’ve got a looming problem in gas prices,” he told reporters in Canberra.
He says the government’s budget makes cuts to family payments and if you’re one of 700,000 families losing payments, these CPI figures are their main issue.
The inflation result and other data showing soft demand for workers – job advertisements on the internet eased 0.8 per cent in September – does provide the RBA scope to keep interest rates steady for longer.
Underlying measures of inflation – the central bank’s preferred gauge as they smooth out volatile price swings – rose 0.5 per cent in the quarter to be 2.55 per cent higher annually.
National Australia Bank senior economist Spiros Papadopoulos expects inflation pressures to ease further.
He said if it wasn’t for the RBA’s concerns about strong investor demand for housing, the inflation outlook would normally increase speculation for another rate cut.
“But the RBA clearly doesn’t want to boost investor demand any further,” he said.