Inflation was again strong in the December quarter, driven by bottlenecks brought on as the world economy continued to open.
The main drivers were transport, housing, and clothing and footwear.
Transport was high because oil prices continued to rise, pushing petrol prices higher (+6.6 per cent). Automotive fuels reached record levels, surpassing the previous high set in the September 2021 quarter. Motor vehicle prices also continued to rise (+1.9 per cent) because of demand and restrictions in global supply chains.
Housing increased (+1.8 per cent) because of rising building costs. New dwellings bought by owner-occupiers (i.e. the price of building a new house excluding the price of the land) rose 4.2 per cent. This is the biggest increase since the introduction of the GST in September 2000 and caused by strong demand in construction, which has enabled builders to pass on higher costs. Supply shortages have also affected prices of timber, hardware and paint, pushing up maintenance and dwelling repairs by 2.4 per cent – another record increase since the introduction of the GST.
Clothing and footwear was a surprise inclusion in the groups rising the fastest as they are usually very flat. A 2.6 per cent increase was driven by garments for women (+3.8 per cent) on the back of reduced discounting.
Cash-strapped singles experienced the biggest increase in prices (+1.5 per cent), because of increased housing costs. Cash-strapped couples and constrained singles saw quarterly increases of 1.4 per cent, with all other cohorts seeing prices increase by 1.3 per cent. Over the past 12 months, constrained couples have seen prices increase by 4 per cent.
Matt Grudnoff is a senior economist at The Australia Institute
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