The annual inflation rate is now 6.1%, as the cost of everyday essentials hits businesses and households

inflation metricon

Source: James Ross / AAP Image

Inflation skyrocketed at an annual rate of 6.1% in the June quarter, new data from the Australian Bureau of Statistics (ABS) has revealed, confirming a drastic increase in the cost of everyday essentials.

It is the highest annual uptick since the GST was introduced in July 2000.

In its new analysis, released Wednesday morning, the ABS confirmed the Consumer Price Index (CPI) not only surged over the year, but by 1.8% from the March quarter — where year-on-year inflation hit a bruising 5.1%.

Underlying inflation — otherwise known as trimmed mean inflation, which excludes the most volatile spending segments — also grew by 4.9%.

Cost increases were driven by housing, rising 9% over the year, transportation costs including petrol, climbing 13.1% annually, and furnishings, household equipment and services, with annual cost growth of 6.3%.

Those increases were driven by high demand and supply-side shortages, which have suppressed the availability of key building materials, fuel, and household goods through 2022.

Lingering supply chain disruptions caused by the COVID-19 pandemic collided with flood disruptions to slow the movement of essential goods and services over the survey period.

High fuel prices contributed to the rising cost of heavy goods like furniture.

At the same time, labour shortages — a hangover from Australia’s closed-border policies earlier in the pandemic — are driving up the cost of some services.

Hospitality venues counting the cost of rising ingredient prices now have hard data to point to, with the cost of vegetables alone surging 7.3% in the year, in large part due to the impact of floods on farms across Australia’s east coast.

The figures fall slightly below broad market expectations, which suggested June’s data would show an even greater uptick of inflationary pressures.

Earlier on Wednesday, Westpac analysts predicted an annual CPI uptick of 6.1% and 1.7% over the quarter, a somewhat lower estimate than broader market expectations of a 6.3% annual lift and a 1.9% quarterly rise.

ANZ found its estimates slightly too aggressive, having predicted year-on-year inflation growth would hit 6.6%, and 2.3% quarter-on-quarter.

More to come.

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