The latest official data shows inflation slowed from 4.9 per cent over the year to October to 4.3 per cent over the year to November.
The Australian Bureau of Statistics (ABS) says this is the slowest annual rate of price rises since January 2022.
Economists were generally expecting the Consumer Price Indicator to show price rises of 4.4 per cent over the year to November, so the data will likely add further weight to sentiment that the Reserve Bank has finished raising interest rates.
The decline in inflation was more modest when the most volatile prices, such as fuel, fruit and vegetables, and holiday travel were excluded, dropping from 5.1 per cent in October to an annual rise of 4.8 per cent in November.
The “trimmed mean”, which does a similar exercise of stripping out volatile price moves and is the RBA’s preferred measure, fell from 5.3 to 4.6 per cent.
“Before the release, the rates market assigned a 100 per cent chance of an RBA rate cut in August before another 25-basis-point rate cut by December,” observed IG market analyst Tony Sycamore.
“Today’s fall in the trimmed mean and the core measure, below 5 per cent, confirms that the disinflation narrative remains firmly in place and expectations of RBA rate cuts in 2024.
But many local economists think traders are too optimistic about the speed with which central banks will move to cut rates.
“We don’t see any cuts until at least late 2024,” ANZ senior economist Catherine Birch told ABC News Channel.
The most significant contributors to the overall rising cost of living in the year to November remained housing (+6.6 per cent), food and non-alcoholic beverages (+4.6 per cent), insurance and financial services (which does not include interest rates, +8.8 per cent), and alcohol and tobacco (+6.4 per cent, mainly driven by surging tobacco prices).
Insurance was a key driver of rising financial services costs, with premiums up 16.3 per cent over the year to November, which the ABS said was due to higher reinsurance and natural disaster costs, and which insurers also attribute to the surging cost of car repairs.
Yet again, price rises for some of these essentials were much lower than they would have been without government subsidies.
While rents surged 7.1 per cent over the year to November, the ABS head of price statistics Michelle Marquardt said the increase was far steeper for those who do not receive Commonwealth Rent Assistance, which increased in September.
(ABC)
