‘We’re not out of the woods’: Underlying inflation increases to 3.5%

The monthly consumer price index (CPI) has been released by the Australian Bureau of Statistics (ABS), showing an increase in underlying inflation.

The recent CPI released by the ABS has given Australians a reminder of the stubborn inflation rates that are lingering as we enter the holiday period. The data, released yesterday (27 November), showed that although annual inflation continued to be steady, underlying inflation increased from 3.2 per cent in September to 3.5 per cent in October.

“Annual inflation was steady at 2.1 per cent in October and remains the lowest annual inflation since July 2021,” said Michelle Marquardt, ABS head of prices statistics.

“Annual trimmed mean inflation was 3.5 per cent, up from 3.2 per cent in the previous month and similar to where it was in August.”

According to the ABS, the trimmed mean is an alternative measure of underlying inflation that reduces the impact of irregular or temporary price changes.

Zara Tonkin, chief of staff at Employment Hero, expressed this as a clear indication that we are yet to escape the clutches of inflationary pressures.

“[Yesterday’s] consumer price index showed underlying inflation increased to 3.5 per cent; a reminder that we’re not out of the woods yet when it comes to inflationary pressures. Employment Hero’s data shows wages climbing 5 per cent year on year and 2.9 per cent over the quarter, led by a 10 per cent increase in construction and trades.

“Despite this, employment growth is slowing, easing to 4.8 per cent annually in October 2024 from 8.3 per cent in 2023, as businesses adopt more cautious hiring practices.

“For the first time in over a year, full-time wages remained flat between September and October, signalling potential shifts in workforce dynamics. Hours worked nationwide dropped 6.0 per cent annually, with casual roles down 25.4 per cent and retail falling 10.4 per cent. South Australia was hit hardest, with hours worked declining 9.6 per cent, driven by reductions in casual hours,” said Tonkin.

For shift-based workers, this combination of rising wages and declining hours only further muddies the water for Aussies still grappling with the cost-of-living crisis. For small and medium-sized enterprises (SMEs), higher wages yet low productivity make reaching the desired business outcomes an extremely tall task.

Tonkin argued that these issues put even more pressure on the shoulders of both employees and employers who are already struggling to keep their heads above water in a volatile economic environment.

“The combination of rising wages and declining hours complicates the financial outlook for workers, especially those reliant on shift-based income. For SMEs, higher wages paired with reduced productivity and operational challenges make maintaining profitability increasingly difficult, creating a tough environment for sustainable growth,” said Tonkin.

“Both employers and employees face significant uncertainty as they navigate this challenging economic landscape.”