Australia’s headline inflation rate eased more than economists expected in April, with fresh Australian Bureau of Statistics data showing annual CPI slowed to 4.2 per cent from 4.6 per cent in March.
The result came in below forecasts from major banks, many of which had expected headline inflation to remain closer to the mid-4 per cent range as broader cost pressures spread through the economy.
Economists had widely anticipated the federal government’s temporary fuel excise cut would help moderate headline inflation during the month, though concerns remained that underlying price pressures were becoming more entrenched.
Westpac had forecast annual headline inflation to rise to 4.8 per cent in April, while Commonwealth Bank of Australia, ANZ and NAB expected the monthly CPI indicator to remain in the low-4 per cent range.
Trimmed mean inflation (a measure that the RBA closely observes), however, aligned more closely with expectations, edging up to 3.4 per cent in the 12 months to April from 3.3 per cent in March.
ABS head of prices statistics, Sue-Ellen Luke, said annual inflation had moderated across much of the CPI basket.
“Annual CPI inflation in the 12 months to April was 4.2 per cent, falling from the 4.6 per cent annual inflation to March,” Luke said.
Housing remained the largest contributor to annual inflation, rising 6.3 per cent over the year, while transport prices increased 6.6 per cent, easing from 8.9 per cent in March.
Seven of the 11 CPI groups recorded slower annual growth compared with the previous month, with transport prices showing the sharpest moderation.
Fuel prices fell sharply during April following the halving of the fuel excise on 1 April, helping drive the softer headline result.
“Automotive fuel prices fell 7.0 per cent from March to April, after rising by 32.8 per cent in the previous month. The fall this month includes the halving of the fuel excise on 1 April. Automotive fuel prices are still 23.5 per cent higher compared to February and before the impact of the Middle East conflict,” Luke said.
Average prices for regular unleaded petrol fell 10 per cent during the month, dropping from 228 cents per litre in March to 206 cents per litre in April. Premium unleaded prices declined 9 per cent to an average of 228 cents per litre.
Diesel prices continued to rise despite the excise reduction, climbing 14 per cent between March and April to an average of 292 cents per litre.
The softer headline inflation outcome contrasted with warnings from economists earlier this week that higher freight, construction and supplier costs were beginning to flow more broadly through the economy.
Westpac economist Neha Sharma had pointed to intensifying business cost pressures, citing stronger supplier pricing data and higher selling prices across businesses.
Economists also flagged growing pressure in construction materials, groceries, transport and health costs ahead of the release, with private health insurance premium increases and higher building material prices expected to keep underlying inflation elevated.
Electricity prices remained a significant contributor to housing inflation, rising 22.5 per cent over the year as temporary Commonwealth and state government rebates rolled off.
Luke said higher oil prices were still affecting freight-intensive goods and services.
“The impact of higher oil prices has also been seen in products and services with high freight and logistics costs, such as parcel delivery and building materials. This is reflected in price increases of 12.4 per cent for Postal services and 4.7 per cent for New dwelling construction compared to 12 months ago,” she said.
