Today’s monthly CPI data measuring the price movements of goods and services over August 2024 revealed a large downward shift in inflation. This was expected given both state and federal government electricity subsidies were reflected in the cost of electricity, and there was also a large expected fall in the price of automotive fuel.

The best measure to look at in today’s data is the trimmed mean, which fell on an annual basis from 3.8 per cent in July 2024 to 3.4 per cent. While still outside the RBA’s target range, it is moving in the right direction and at a consistent pace.

Of more concern is continued sticky inflation in the areas of health, insurance, education and new dwelling purchases. Rent inflation is still high, however, indications are that rent increases have stabilised across most of the country. But this stabilisation will take some time to be reflected in the ABS’s data.

Overall, this result provides no surprises – on the upside or downside – to the RBA, and is unlikely to shift its thinking around the timing of the first cut to the cash rate. Given household consumption is likely to stay very subdued for the remainder of the year, it is likely that trimmed mean monthly inflation will continue its slow trend down over the next few months.