Australia’s consumer price index held steady at 3.4 per cent in the 12 months to January, coming in below expectations.

The index had been widely expected to rise by 3.6 per cent on an annual basis, when the data was released by the Australian Bureau of Statistics on Wednesday.

The biggest contributors to the January increase were housing (4.6 per cent), food and non-alcoholic beverages (4.4 per cent), alcohol and tobacco (6.7 per cent) and insurance and financial services (8.2 per cent).

Working in the other direction was recreation and culture, down 1.7 per cent over the 12 months, led by a sharp fall in holiday travel and accommodation prices.

When volatile price changes like automotive fuel, fruit and vegetables, and holiday travel were stripped out, the index moderated slightly.

An annual rise of 4.1 per cent was recorded in January, down from 4.2 per cent in December.

Only some of the basket of goods and services captured in the quarterly report are updated each month and economists say the results can be volatile month to month.

Ahead of the release, Treasurer Jim Chalmers warned the monthly readings could be less reliable than the quarterly measure.

“But the overall direction of travel is clear: annual inflation moderated to a two-year low at the end of last year, but we would like it to moderate further and faster,” he said.

The central bank has been lifting interest rates to bring down inflation and, although is getting closer to its two-three per cent target range, is forecasting a prolonged final stretch to get there by 2025.

Construction work done data was also released by the bureau on Wednesday and showed total work up 0.7 per cent over the quarter, driven by engineering.

Poppy Johnston
(Australian Associated Press)