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Inflation slows to 6.0 per cent in the June quarter, ABS says

Rent and international travel continue to drive up the inflation rate, new data from the Australian Bureau of Statistics has revealed.

Low vacancy rates and a tight rental market have caused rents to skyrocket to their strongest quarterly rise since the 1980s, fresh figures have revealed. The Australian Bureau of Statistics revealed on Wednesday that rent increases (up 2.5 per cent) and the high cost of international travel (up 6.2 per cent) were the lead drivers of inflation in the June quarter.

Overall, headline inflation fell for the second consecutive month to 6 per cent in the year to June, down from 7 per cent in the March quarter and 7.8 per cent in December.

ABS head of prices statistics Michelle Marquardt said the quarterly rise of 0.8 per cent was the lowest since September 2021. “While prices continued to rise for most goods and services, there were some offsetting price falls this quarter including for domestic holiday travel and accommodation and automotive fuel,” she said. Rental price increases have now risen 6.7 per cent annually, the largest rise since 2009, reflecting the squeeze on vacancy rates.

Higher demand for international travel, in particular to Europe for the summer peak season, led to price increases that were partially offset by falls for travel to Southeast Asia and New Zealand.

The result is expected to take some of the pressure off the Reserve Bank of Australia to lift rates next month.

A dip in core or underlying inflation, which strips out volatile items like fruit, vegetables and petrol, to 5.9 per cent from 6.6 per cent will be welcome news for the RBA board.

Oxford Economics Australia head of macroeconomic forecasting Sean Langcake said the result would “buy the RBA some more time and allow them to keep rates on hold a little longer”.

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