Is this the start of something big? Not really. The ABS also publishes a figure it calls the 'Trimmed Mean’ which takes out changes which are atypical or temporary. That figure is an increase of 0.1% for the quarter.
Let’s look at some of these atypical events in these CPI numbers...
1. CHILDCARE: -95%
This is an interesting one because the cost did not go down (according to some mothers it went up). The reason for the fall in the figures is the consumer did not pay for it during the quarter, the Government did. This will reverse in the September quarter.
2. FUEL PRICES: -19.3%
The cost of petrol went down in the quarter. The industry says it was because of lower crude prices but they have been down for much longer than 3 months. Who knows with petrol prices, the ACCC certainly doesn’t. Petrol prices are already up again and will be reflected in the September CPI figure.
3. PRESCHOOL AND PRIMARY EDUCATION: -16.2%
Almost certainly because more people worked from home. Again it is highly unlikely the actual prices fell.
There were small falls in electricity (-2.5%) and gas (-0.9%) - this is the one to watch. For large users like office buildings we negotiate supply contracts. The renewals of those contracts are showing falls in excess of 20%.
In the short term, prices will continue to fall as highly subsidised renewables are being priced at the marginal variable cost which is zero. The retailers are saying they will face more bad debts with the pandemic and can’t follow these reductions. The system is such a mess it is difficult to predict the future.
For the first time we can remember, the prices of household items like furniture and electricals are up slightly - probably due to a lack of supply.
For property owners, there's not much in it. We thought the domestic rents would show a larger drop (-1.3%) but maybe the surplus is concentrated on the inner city. Overseas students are the factor here.