Dire warning for Aussies on the cost of living as latest inflation rate is revealed
- Inflation rose 3.5 percent in the year to July
- Moderation followed $300 off energy bill
Inflation in Australia has fallen, but the moderation is likely to be short-lived as inflation is reduced by taxpayers cutting electricity bills.
The consumer price index for July fell to 3.5 percent, from 3.8 percent in June.
According to the Australian Bureau of Statistics, annual $300 rebates on energy costs, which came into effect on July 1, are to blame for the sharp drop in inflation.
“The expanded and extended Commonwealth Energy Bill Relief Fund rebate and the introduction of state government rebates will commence from July 2024,” the report said.
‘These discounts ensure that electricity costs for households decrease.’
Monthly inflation figures for July showed a 5.1 percent drop in electricity costs over the year, a dramatic change from a long period of double-digit annual increases.
Finance Minister Jim Chalmers announced $300 cuts in four quarterly installments of $75 in the May budget.
The Labor Party pledged to reduce energy bills by an average of $275 a year at the 2022 federal election.
Inflation in Australia has fallen, but the moderation is likely to be short-lived
The Labor government in Queensland has gone one step further, announcing a $1,000 refund on annual energy bills as the party battles for a fourth consecutive term in October.
In the May Budget, the Western Australian Labor government announced a one-off $400 credit rebate for electricity bills.
The Reserve Bank warned in June that state and federal electricity cuts would only temporarily reduce inflation.
“Recent budget outcomes could also affect demand, although federal and provincial energy cuts will temporarily lower inflation,” the report said.
The RBA’s own forecasts indicate that inflation will fall to 2.8 per cent by June 2025, bringing it within the Reserve Bank’s 2-3 per cent target range for the first time since 2021.
But the consumer price index will rise again and reach 3.7 percent by the end of next year.
The battle against inflation is far from over: rents rose by 6.9 percent in the year to July.
Bread and grain prices rose 4.4 percent, while gasoline prices rose 4 percent.
The largest increase occurred in tobacco, at 13.9 percent, even though the indexation will not take effect until September 1.
The consumer price index for July fell to 3.5 percent, from 3.8 percent in June (pictured is a Woolworths shopper on Sydney’s Lower North Shore)