Australia’s CPI increased 0.2% QoQ and 2.4% YoY in Q4 2024, down from 2.8% YoY in Q3 2024 and slightly below the consensus estimate of 2.5% YoY. The quarterly rates of 0.2% in Q3 and Q4 2024 were the lowest quarterly rates since the decline in Q2 2020, and the annual rate of 2.4% is the lowest since Q1 2021.

Among the subgroups, recreation & culture (+1.5% QoQ) and alcohol & tobacco (+2.4% QoQ) had the fastest rises. Outside of these indexes four subindexes saw declines, including housing down -0.7% QoQ, and three subgroups were at or lower than the 0.2% monthly rate. Goods inflation actually eased to the lowest since Q4 2016 at 0.8% YoY in Q4 2024, down from 1.4% YoY in Q3 2024. Services inflation, fueled by recreation & culture, rents, medical & hospital services, and insurance, remains sticky with an annual rate above 4% where its been for the last ten quarters.

It is worth noting that Q4 2024 CPI rates were heavily affected by government relief programs. The Commonwealth Energy Bill Relief Fund (EBRF) rebates had a significant impact on electricity prices, driving them down -9.9% QoQ and -25.2% YoY, compared to what would have been a 0.2% QoQ increase and only -1.6% YoY decrease without the relief. Similarly, the 10% increase in Commonwealth Rent Assistance (CRA) rates helped maintain rent increases at just 0.6% QoQ and 6.4% YoY, which would have otherwise risen to 7.8% YoY without the assistance program.

The monthly CPI indicator was trending in a different direction however, up 0.2 ppts to 2.5% YoY in December, the highest since August 2024. Excluding volatile items like fuel, fruit & vegetables, and holiday travel & accommodation, CPI was up 2.7% YoY, easing from 2.7% YoY.