Prices up amid rebound

CONSUMER prices have spiked at the fastest rate since 2006 as the end of free childcare and a bounce in petrol prices bring Australia’s flirtation with deflation to a halt.

The consumer price index was up 1.6 per cent in the three months to September compared with the previous quarter, the Australian Bureau of Statistics said on Tuesday.

Year- on- year, inflation came in at a still weak 0.7 per cent, seasonally adjusted.

Over the year to June, prices had fallen 0.3 per cent. It was only the third time consumer price growth was negative year- on- year in records going back to 1949.

Amid the economic fallout from the pandemic, sliding rents and plunging petrol prices — coupled with a 95 per cent fall in childcare costs — drove the steepest quarter- onquarter fall in the CPI on record, at 1.9 per cent.

Nationally, the federal government brought an end to its temporary childcare support on July 13, and that accounted for 0.9 percentage points of the 1.6 per cent lift in inflation during the September quarter, the ABS said.

In Melbourne, the extension of free childcare meant the pace of consumer price growth was only half that of Sydney, at 0.9 per cent compared with 1.8 per cent.

The 1.6 per cent growth in the CPI nationally was the biggest jump for any quarter since mid 2006. Petrol prices climbed 9.4 per cent as global oil prices bounced.

As more Australians worked away from the office and spent heavily on products to help, there was a dramatic 12 per cent jump in prices for furnishings, household equipment and services.

While some pandemic- related price distortions also eased over the three months to September, state- based rental assistance packages — including moratoriums on evictions — remained.

The ABS figures showed household rents fell for the second straight quarter and were down in annual terms for the first time on record amid climbing vacancy rates.

Rents in Melbourne and Brisbane have fallen for two consecutive quarters, while in Sydney, they have fallen for five straight quarters, Ernst and Young chief economist Joanne Masters said.

In the Perth market, they have been falling since late 2015, Ms Masters said.

The trimmed mean CPI measure, which excludes more volatile prices — such as those for energy, fruit and vegetables — climbed 0.4 per cent in the September quarter.

Ms Masters said “very low inflation may be welcomed by households … but it is indicative of a weak underlying economy”.

“In short, there are still significant challenges ahead,” she said.