Monthly inflation indicator falls to 2.7pc over the year

Inflation is easing

In the USA this week, so blog posting is a little sporadic.

Median market forecasts were spot on for the monthly inflation indicator in August.

Which is to say, monthly inflation was slightly negative, helped lower by energy bill relief and lower fuel prices. 

Headline inflation dropped sharply from 3.5 per cent to 2.7 per cent over the year to August, the lowest reading in the 3 years since August 2021. 

There was plenty of gnashing of teeth about the impact of subsidies, but trimmed mean inflation also fell back from 3.8 per cent to 3.4 per cent, for a 2½ year low,

Source: ABS

Treasurer Chalmers called a celebratory media conference, and the government was pleased to put out a few releases to celebrate the moment of headline inflation falling back into the target range,

Rent inflation was still running hot on these figures, but in the real world asking rents have now eased.

Similarly new dwelling costs have continued to contribute to inflation, though it feels like this should ease up soon.

There was also a chunky contribution from sin taxes on alcohol and tobacco, but this should arguably be excluded. 

The good news is that fuel prices have fallen significantly through September, so inflation will continue to ease from here, probably much closer to 2 per cent next month with a helping hand from the base effect.

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