Australian supermarket food prices have increased by a new peak of nearly 10 per cent over the past 12 months, outpacing annual inflation as the cost of living continues to rise.

Australia's weighted inflation rate for May came in at 5.6%, sharply lower than April's figure of 6.8% and lower than the 6.1% expected by economists polled by Reuters. Headline inflation for May came in at 5.8%, lower than April's figure of 6.9%. It was the lowest recorded rate since April 2022. 

THE LOWER INFLATION RATE WAS DUE TO A FALL IN THE PRICE OF FUEL

The latest monthly consumer price indicator shows inflation fell sharply to 5.6 per cent over the 12 months to May, down from 6.8 per cent in April. 

• The annual rate of inflation slumped from 6.8 per cent in April to 5.6 per cent in May
• Inflation is still well above the Reserve Bank's 2-3 per cent target
• Many analysts believe the latest data may give the RBA room to hold off on another rate rise when it meets next Tuesday

A large fall in the cost of fuel, reversing a sharp rise in April, was the biggest downwards contributor to prices.

"The annual movement for automotive fuel remains volatile, partly reflecting price changes from 12 months ago," said Michelle Marquardt from the Australian Bureau of Statistics, which compiles the data.

"Annually, automotive fuel prices fell 8 per cent in May, compared to a rise of 9.5 per cent in April."

Downward pressure on prices also came from travel and accommodation, as the post-pandemic summer and Easter travel booms subsided, although holiday costs were still 7.3 per cent higher than a year ago.

https://www.abc.net.au/news/2023-06-28/monthly-inflation-figures-may-2023-abs/102535072

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