The decline from December’s highs of 8.4% back to 7.4% marks the second highest monthly inflation print since the ABS began accounting for monthly inflation in September 2018. 

The ABS outlined the most significant factors to January’s monthly inflation print were recreation and culture, up 10.2%, housing costs, up 9.8% and food and non-alcoholic beverages, up 8.2%.

With recreation and culture leading the way, ABS Head of Prices Statistics Michelle Marquardt said airfares and holiday accommodation prices tend to be highly variable, with January proving no exception.  

“On a monthly basis holiday travel and accommodation prices fell 7.2% in January following a rise of 29.3% in December,” Ms Marquardt said. 

“When excluding holiday travel [from monthly CPI], the annual movement was a rise of 6.7% in January, compared to 7.4% in December." 

Despite the January dip, Westpac Senior Economist Justin Smirk said the Monthly CPI Indicator can be very volatile month to month as it is not a true monthly price index. 

“[It is] rather the release of data for the quarterly CPI as it becomes available hence it can be very volatile month to month depending on the timing of the price surveys,” Mr Smirk said. 

Has the peak been reached? 

With inflation showing signs of easing, many economics and analysts believe the inflation peak is either here, or on the horizon.

Stake ASX Equities Analyst Dylan Zhang said the lower than expected 7.4% CPI reading suggests that inflation has indeed peaked.

“In addition, the 0.5% quarter on quarter GDP growth was lower than the expected estimate of around 0.8% as rate increases finally caused the economy to cool,” Mr Zhang said. 

“Looking forward, it’s likely the slowdown will continue as the lag effects of monetary policy take hold — reducing investment and spending in the second half of 2023 and early 2024.”


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