Australia's consumer price inflation saw a decline in December, reaching its lowest level since early 2021, largely due to decreases in electricity and automotive fuel prices, according to the Australian Bureau of Statistics' report on Wednesday.
During the December quarter, consumer prices rose by 2.4 percent annually, a decrease from the 2.8 percent increase observed in the previous quarter, marking the most subdued rate since March 2021.
The primary factors contributing to this deceleration in annual inflation were significant reductions in electricity and automotive fuel costs, alongside moderated inflation for new dwelling prices.
On a quarter-to-quarter basis, the consumer price index experienced a growth of 0.2 percent, maintaining the same pace as recorded in the September quarter.
Michelle Marquardt, the ABS head of prices statistics, noted that this 0.2 percent uptick was the lowest since the June 2020 quarter, a period impacted by the COVID-19 pandemic when childcare services were complimentary.
The annual trimmed mean inflation eased to 3.2 percent in the fourth quarter, down from 3.6 percent in the third quarter.
Additionally, the Bureau released the CPI indicator for December, showing an annual rise of 2.5 percent, accelerating from November's increase of 2.3 percent.
This rise was primarily driven by increased costs in food and non-alcoholic beverages, alcohol and tobacco, and housing.
According to Capital Economics' economist Abhijit Surya, the overall picture suggests that the latest data should bolster the Reserve Bank of Australia's (RBA) confidence in a sustainable decrease of underlying inflation towards its target.
Surya anticipates that the RBA will initiate its monetary easing cycle in February, advancing from an initial expectation of May. Moving forward, it is projected that the bank will implement a total rate reduction of 75 basis points over the easing period.
Nonetheless, the economist warns that there is a potential for a shift towards more aggressive rate reductions.
