Inflation figures Australia: Major development in the battle for the cost of living in the country
- Inflation fell to 4.1 percent through December
- This represented a large drop from 5.4 percent in September
- Consumer price index now at its lowest level in two years
Inflation has fallen significantly to a two-year low, just months before Australians are due to receive their tax cuts.
The consumer price index fell to 4.1 percent in the year to December, down from 5.4 percent year-on-year in September.
This was the lowest headline inflation rate since December 2021, when it stood at 3.5 percent after lockdowns in Sydney and Melbourne but before Russia's invasion of Ukraine, which sent petrol prices soaring.
Headline inflation has delivered a downward surprise, with price pressures easing after the Reserve Bank of Australia raised rates for the 13th time in 18 months in November, taking the cash rate to a 12-year high of 4.35 percent to stand.
An easing of the CPI could also potentially mean rate cuts in 2024, should the RBA revise its forecasts for inflation to return to the top of its 2 to 3 percent target before December 2025.
Inflation has fallen significantly just months before Australians are set to receive some generous tax cuts (pictured is a Sydney Woolworths shopper)
The latest data from the Australian Bureau of Statistics has been released a week after Prime Minister Anthony Albanese announced that Labor would review his Liberal predecessor Scott Morrison's phase three tax cut policy, bringing more relief to low- and middle-income earners from July 1 flow.
Prices for some items even fell in 2023, with clothes and shoes 1.1 per cent cheaper over the year as Australian consumers flocked to November's Black Friday sales rather than leave their Christmas shopping until December.
The latest inflation data was released a day after official data showed retail sales fell 2.7 percent in December.
But some items are still a lot more expensive, as tobacco prices rose 7 percent last year.
This was the lowest headline inflation rate since December 2021, when it stood at 3.5 percent after the lockdowns in Sydney and Melbourne, but before Russia's invasion of Ukraine sent petrol prices soaring (pictured is a Sydney petrol station in August 2023).
