Australia’s rate of inflation has slowed to the lowest level in over three years, official figures have revealed. According to data published by the Australian Bureau of Statistics (ABS) on Wednesday, the Consumer Price Index (CPI) – the headline measure of inflation – rose by 2.4 per cent in the 12 months to the end of the quarter ending in December 2024 compared to 2.8 per cent in the year to September.
It marks the lowest rate of inflation in a 12-month period to the end of any quarter since March 2021 when annual inflation was 1.1 per cent, and a sharp decline from the peak of 7.8 per cent reported in the year to December 2022. Treasurer Jim Chalmers said in a statement posted on social media that the figures show “substantial and sustained progress in the fight against inflation”.
He said that headline inflation is around the middle of the 2-3 per cent target band set by the Reserve Bank of Australia (RBA), the nation’s Central Bank. The ABS said that annual trimmed mean inflation, which excludes volatile price swings and is the RBA’s preferred measure of underlying inflation, was 3.2 per cent in the year to December, down from 3.6 per cent in the 12 months to September and the lowest level since December 2021.
The RBA previously predicted that underlying inflation would be 3.4 per cent in the period to December and the Australian Broadcasting Corporation (ABC) reported that economists were expecting underlying inflation to come in at 3.3 per cent.
Cherelle Murphy, Chief Economist from Ernst and Young (EY) Oceania, told ABC television that the new figures are the best indicator so far that the RBA Board of Governors will cut interest rates at its next meeting, Xinhua news agency reported. The RBA has kept the cash rate target on hold at 4.35 per cent since November 2023 and has not made an interest rate cut since November 2020.
The RBA board will make a decision on interest rates at its first meeting of 2025 in mid-February.