The new monthly inflation figures revealed in the 12 months to August, the largest contributors were new dwelling construction, up 20.7%, and automotive fuel, up 15.0%. 

The total monthly figure of 6.8% sees the level on par with that recorded in June, also at 6.8%. 

Australian Statistician Dr David Gruen AO said the slight fall in the annual inflation rate from July to August was mainly due to a decrease in prices for automotive fuel. 

"This saw the annual movement for automotive fuel fall from 43.3% in June to 15.0% in August," Dr Gruen said. 

The monthly reading lies in conjunction with the ABS traditional quarterly inflation report, following calls earlier this year to increase the frequency of inflation reporting. 

Importantly, the ABS new monthly CPI indicator excluded 'volatile' essential items of fruit and vegetables, fuel and electricity - all key influences to real inflation and cost of living pressures. 

Despite excluding these factors, monthly data revealed in the year from August 2021 to 2022, fruit and vegetable prices increased 18.6% with fuel increasing 15.0%.

Westpac Chief Economist Bill Evans said the last two months have seen a significant fall in petrol prices, down from averaging $1.90 per litre in early July to $1.55 per litre during September - a 17.5% decline.

"Petrol price moves have an immediate impact on budgets and are often seen as a bellwether for wider inflation," Mr Evans said. 

With the cuts to the petrol excise having ended, petrol prices are expected to rise another 25.3 cents per litre in the coming weeks presenting challenges to inflation figures in the months ahead.

RACQ spokesperson Nicky Haydon anticipates in the next peak in October, petrol prices in south east Queensland are expected to sit between $2 and $2.05, yet falling to around $1.80 in the cheap phase. 

“Fuel companies have already purchased the stock they have in the ground at the discounted excise, so they need to use that fuel first before purchasing new stock at the higher price," Ms Haydon said.

RBA not sold on monthly inflation numbers

In a speech earlier this month, Reserve Bank Deputy Governor Michelle Bullock said the devil is in the detail with monthly inflation numbers given they do not account for the full basket of goods.

"Everyone will be looking at them and trying to figure out what is the noise and what is the information in the monthly figures," Ms Bullock said.

"So I’m not so sure that, quite immediately, we will be looking at monthlies (for guidance).

"What I would say is that our forecasts for inflation are to peak at about 7.75% to 8.0%  towards the end and early into next year, so those are the numbers we’re currently working with."

The views of major bank economists bar CommBank remain relatively in line with the RBA's forecast of peak inflation, all exceeding the 7% mark by the end of the year. 

See more: When do the experts expect inflation to peak?


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