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Inflation bites, but expert says AI can help

ABS data shows housing, food lead Australian inflation as prices rise 3.4% but AI and workforce development key to navigating inflationary waters, Charles Ferguson, General Manager at G-P says.

“For businesses looking to do more with less when navigating churning waters, investing in artificial intelligence (AI) and workforce development can counter productivity declines and boost efficiency. Strategic use of the technology will allow employees to reduce the number of hours they spend working on manual tasks and allow them to focus on higher-value work instead. AI when leveraged effectively can complement and enhance employees’ capabilities rather than supplant their roles, and in doing so, add significant value to organisations during tough economic times while keeping costs low.” 

“The monthly CPI indicator rose 3.4% from January 2023 to January 2024, indicating that unsurprisingly, the cost of doing business will remain expensive this year. While there are glimmers of hope with the CPI indicator remaining steady from December 2023, offering a beacon of relief for business after two years of economic upheaval, the reality is that market conditions will remain tight for organisations of every scale in the foreseeable future. 

The Australian Bureau of Statistics (ABS) has released its monthly inflation indicator for January, showing a 3.4 percent increase over the preceding 12 months leading up to January 2024.

Major contributors to this annual uptick include Housing (+4.6 percent), Food and non-alcoholic beverages (+4.4 percent), Alcohol and tobacco (+6.7 percent), and Insurance and financial services (+8.2 percent). However, this was partially offset by a decline in Recreation and culture (-1.7 percent), primarily attributed to reduced Holiday travel and accommodation prices (-7.1 percent).

Breaking down specific categories, Housing saw a rise of 4.6 percent in the 12 months to January, with new dwelling prices climbing by 4.8 percent over the year. Rent prices experienced a significant uptick of 7.4 percent during the same period, reflecting a tight rental market nationwide.

Annual electricity prices rose by 0.8 percent in the 12 months to January 2024. The introduction of the Energy Bill Relief Fund rebates for eligible households from July 2023 helped offset electricity price increases from annual price reviews in July.

Excluding the Energy Bill Relief Fund rebates, electricity prices would have risen by 15.3 percent in the 12 months to January 2024, illustrating a substantial impact on household expenses.

Anneke Thompson, Chief Economist, CreditorWatch said: “The monthly CPI remained steady in January at 3.4 per cent, although it showed a moderate decline when removing volatile items and holiday travel. Housing, particularly rents, continue to put pressure on the inflation rate, with rents rising 7.4 per cent over the year to January 2024, which was the same rate recorded in December.

“Insurance and financial services cost inflation also remained high, and steady, at 8.2 per cent. There was a modest increase in food and non-alcoholic beverage inflation, caused mainly by an increase in the price of fruit and vegetables, which declined in price by 2.2 per cent over the year to December, but increased again by 1.6 per cent over the year to January. Given fruit and vegetable prices do jump around based on seasonal and weather factors, this should not give the RBA much cause for concern.

“Overall, the rate remaining steady is positive news for borrowers. In particular, the RBA will be pleased to see some easing of inflation in the Health Services sector (from 4.7 per cent to 3.9 per cent), although other service sectors, such as education, have more ‘sticky’ inflation rates, with inflation in this category remaining steady at 4.7 per cent. The RBA, however, will need to see more significant easing in monthly inflation before it even begins to consider a cut to the cash rate.”

Michelle Marquardt, ABS head of prices statistics, noted, “Annual inflation for the monthly CPI indicator was steady at 3.4%, marking the lowest annual inflation since November 2021.” She added, “When excluding volatile items from the monthly CPI indicator, the annual rise in January was 4.1%, down from 4.2% in December. Annual inflation excluding volatile items has been declining since the peak of 7.2% in December 2022.”

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Yajush Gupta

Yajush Gupta

Yajush is a journalist at Dynamic Business. He previously worked with Reuters as a business correspondent and holds a postgrad degree in print journalism.

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