Monthly inflation has slowed to its lowest level in three years on the back of falling fuel prices and the federal government's energy bill relief.New data from the Australian Bureau of Statistics (ABS) showed headline inflation fell from 3.5 per cent in July to 2.7 per cent in August – the lowest figure since August 2021.But while that figure is now sitting within the RBA's target range of 2-3 per cent, it's unlikely to spark an interest rate cut, with the central bank set to look through the impact of the first instalment of $3.5 billion in energy rebates.
Inflation has fallen to its lowest level in years. (Kate Geraghty)"Those $300 annual rebates for households, they're showing up the headline figure," Nine Finance Editor Chris Kohler said."It's being taken with a bit of a grain of salt. What people are really looking at is the core inflation figure."Even so, it's still largely positive news.That CPI excluding volatile items (which the ABS considers to be fruit and vegetables and fuel) and holiday costs snuck into the Reserve Bank's target range at 3 per cent.Core inflation – the central bank's preferred measure of the trimmed mean – is outside the band at 3.4 per cent, but nonetheless slowed from 3.8 per cent in July."Both measures of annual underlying inflation in August are the lowest they have been for 2.5 years," ABS head of prices statistics Michelle Marquardt said.Treasurer Jim Chalmers was quick to welcome the data while at the same time acknowledging households are "still under pressure"."This is a good result that shows we're getting inflation under control but we're not getting ahead of ourselves because we know it doesn't moderate in a straight line," he said.Economists say the data is unlikely to have much of an impact on the timing of any interest rate cuts, which borrowers are likely to have to wait until next year for."While this result is on the right track it won't be nearly enough for the RBA to pop the champagne, nor is it likely to bring forward the timing of rate cuts into 2024," Canstar data insights director Sally Tindall said."At 3.4 per cent in the monthly indicator, annual trimmed mean inflation is still too high."Relief in the form of cash rate cuts is still likely to be some months away."
