Inflation in Australia nears highest level in 32 years

Annual inflation has hit a high not seen in nearly 32 years as Australian households brace for greater cost of living challenges.

New data from the Australian Bureau of Statistics (ABS) showed that in the September quarter the consumer price index (CPI) rose 1.8 percent to an annualized rate of 7.3 percent.

The CPI - normally used to measure inflation in Australia - is now at an annual rate not seen since 1990.

"The last four quarters have seen strong quarterly gains supported by higher prices for new residential construction, automotive fuel and food," ABS said in its data release.

"The trimmed average annual inflation, excluding major price increases and decreases, increased to 6.1 percent, the highest since ABS first published the series in 2003."

Price Program Manager at ABS Michelle Marquardt said prices for new housing and automotive fuel were the most significant contributors to the annual rise in inflation.

"For the second straight quarter, annual price inflation for new housing was the strongest since the series began in 1999, as high material and labor costs mixed with strong demand," said Marquardt.

"Less grant payments from the Federal Government's HomeBuilder and similar state-based housing development programs compared to the same time last year also contributed to the annual increase.

"Excluding the impact of reduced grant payments made, new residences will register an annual increase of 17.7 percent."

The new blow to consumers comes just hours after the federal budget was lowered, which warned of a 50 percent rise in electricity bills next year.

In explaining its economic outlook for the country, the Treasury Department estimates that electricity prices will rise by an average of 20 percent by the end of 2022, before surging another 30 percent in 2023-24.

"These increases in wholesale electricity and gas prices can be expected to flow into higher consumer prices as wholesale contracts are renewed," the Treasury notes in its budget statement.

"The treasury has assumed retail electricity prices will increase by an average of 20 percent nationally by the end of 2022, contributing to the forecast for a higher CPI in 2022–23.

"Given future wholesale contract prices for electricity remain high, retail electricity prices are expected to rise another 30 percent in 2023–24."

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