The annualised Consumer Price Index (CPI) was 3.8 per cent in the June quarter. Does this mean inflation is rapidly spinning out of control? No – so don’t panic.
In the June 2020 quarter, we had a massive drop in the CPI. The quarterly change was -1.9 per cent, but was largely driven by two things: free childcare and a big drop in petrol prices. Both were temporary.
The drivers of inflation this quarter were transport, healthcare and household furnishings and equipment.
Transport was up because oil prices continue to rise, pushing petrol prices higher (+6.5 per cent). The generous business tax write-offs for utes also pushed up average motor vehicle prices (+2.2 per cent).
The main driver of the healthcare increase was the rise in private health insurance premiums (+2.4 per cent).
Household furnishings and equipment do not usually have a big impact on inflation, but the housing boom has seen timber in short supply and that has pushed up the price of timber-based furniture (+3.8 per cent).
The cash-strapped saw the smallest increase in prices (+0.6 per cent) because they’re less likely to have private health insurance and spend a smaller proportion of their income on transport. Constrained couples saw the biggest increase (+0.9 per cent) because they’re more likely to have private health insurance and they’re more likely to be tripping around Australia. Constrained and well-off singles and well-off couples all saw an increase of 0.8 per cent.
Have you noticed a jump in household costs? What were the main culprits? Share your experience in the comments section below.
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