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Inflation continues to bubble along in Australia to the highest since Q3 2008. Australian consumer prices rose 0.8% in the second quarter. Automotive fuel prices climbed 6.5% and Electricity prices jumped 3.3%. The ABS expects the sharp jump in annual inflation to be temporary

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Australian consumer prices rose 0.8% in the second quarter the Australian Bureau of Statistics said Wednesday. Annual inflation increased to 3.8% y/y in the second quarter, up sharply from the 1.1% rise marked in the first quarter and largely in line with the result expected by economists.

Australia Q2 2021 CPI

  • 0.8% q/q vs. expected 0.7%, prior 0.6%
  • 3.8% y/y vs. expected 3.8%, prior 1.1% (the highest since 2008)
  • Automotive fuel prices climbed 6.5%
  • Medical and hospital services increased 2.4% due to an annual increase in private health insurance premiums
  • Electricity prices jumped 3.3% 
  • Food items such as vegetables, fruit and beef due to a variety of factors including flooding in some regions of New South Wales, the ABS added, food rose 0.7% vs 0.7% in Q1
  • Transport rose 10.7% vs 0.4% in Q1,, alcohol & tobacco (6.7% vs 7.9%), furnishings (16.9% vs 2.7%), health (4.8% vs 3%), recreation (2.5% vs 1.5%), education (3.7% vs -0.1%), and insurance & financial services (0.6% vs 0.6%).
  • Motor vehicle prices rose 2.2% due to increased demand combined with supply constraints such as the global semi-conductor shortage.
  • The ABS said the sharp jump in annual inflation was likely to be temporary.

Core inflation: Trimmed mean (RBA target band is 2-3%

  • 0.5% q/q expected 0. 5% q/q, prior0.3%
  • 1.6% y/y expected 1.6% y/y, prior 1.1%

Weighted Median:

  • 0.5% q/q vs. exp. 0.5%, prior 0.4%
  • 1.7% y/y vs 1.6 , prior 1.1%

"The annual CPI movement was significantly influenced by Covid-19-related price changes from this time last year," the ABS said.

Key drivers of annual inflation included things like the full unwinding of a move to free childcare implemented in 2020 to bolster the industry amid the pandemic. Measures of core inflation edged higher. Trimmed mean inflation rose 1.6% through the year, up from 1.1% in the first quarter.

Source: ABS

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