Inflation figures Australia: Major development in country’s cost of living battle

  • Inflation fell to 4.1 percent in the year to December
  • That was a big drop from September’s 5.4 percent
  • Consumer price index now at the lowest level in two years

Inflation has fallen significantly to a two-year low just months before Australians are due to receive their tax cuts.

The consumer price index fell to 4.1 percent in the year to December, from 5.4 percent annually in September.

It was the lowest headline inflation rate since December 2021, when it was at 3.5 percent following the Sydney and Melbourne lockdowns, but before Russia’s Ukraine invasion, petrol prices surged.

Core inflation surprised to the downside, with price pressures easing after the Reserve Bank of Australia raised interest rates for the 13th time in 18 months in November, taking the cash rate to a 12-year high of 4.35 percent.

Inflation has fallen significantly just months before Australians are set to receive some generous tax cuts (pictured is a Sydney Woolworths shopper)

Inflation has fallen significantly just months before Australians are set to receive some generous tax cuts (pictured is a Sydney Woolworths shopper)

The latest Australian Bureau of Statistics data was released a week after Prime Minister Anthony Albanese announced Labor would overhaul his Liberal predecessor Scott Morrison’s phase three tax cut policy so that more relief flowed to low and middle income earners from July 1.

Prices for some items even slipped in 2023, with clothes and shoes 1.1 per cent cheaper over the year as Australian consumers flocked to the November Black Friday sales instead of leaving their Christmas shopping until December.

The latest inflation data was released a day after official data showed retail sales fell 2.7 percent in December.

This was the lowest headline inflation rate since December 2021, when it was at 3.5 per cent following the Sydney and Melbourne lockdowns, but before Russia's Ukraine invasion pushed up petrol prices (pictured is a Sydney petrol station in August 2023)

This was the lowest headline inflation rate since December 2021, when it was at 3.5 per cent following the Sydney and Melbourne lockdowns, but before Russia’s Ukraine invasion pushed up petrol prices (pictured is a Sydney petrol station in August 2023)