ABS Consumer Price Index: Inflation eases in November to near two-year low

The latest consumer price index figures showed annual inflation slowed to 4.3 per cent in November, down from October’s 4.9 per cent increase, the Australian Bureau of Statistics said on Wednesday.

The headline inflation result, which was the lowest in 22 months, was below economists’ expectations for a 4.4 per cent increase.

In November, consumers saw price pressures for food, non-alcoholic beverages and fuel ease while prices for rents, electricity and insurance rebounded.

Measures of consumer price growth excluding volatile items, like groceries, fuel and holiday travel, also continued to ease, falling to 4.8 per cent in November, down from 5.1 per cent the month prior.

The benchmark S&P/ASX200, which had been trading about 0.4 per cent lower in early trading, jumped to trade 0.1 per cent lower near midday following the release of the figures.

Inflation has cooled markedly in the last 12 months, easing from its peak of 7.8 per cent in December 2022, as the RBA continued its aggressive campaign to cool the economy and bring price pressures back to its 2 to 3 per cent target band.

Economists are increasingly confident that the Australian economy is on track for a ‘soft landing’, that is inflation returning to its pre-pandemic levels without causing a recession.

The fresh reading comes ahead of the RBA’s next interest rate decision, scheduled for February 6, its first of 2024, where it is widely expected to keep rates on hold.

But while the Bureau of Statistics’ monthly inflation indicator factors into the central bank’s thinking on rate decisions, the next quarterly inflation reading, due January 31, would be the RBA’s preferred gauge of price pressures across the economy, analysts said.

Ahead of the updated figures, money markets were fully priced for an August rate cut and were implying a strong chance of a follow-up cut in December, taking the cash rate to 3.9 per cent by year’s end.

More to come.