Chalmers Has One Point, Fuel Did Explain More Than 100% of August CPI Rise
One component added more to August CPI than the entire CPI actually rose. The detailed ABS numbers explain how.
The most remarkable number in Australia’s August CPI release is not 4.0 per cent.
It is 111 per cent.
Automotive fuel prices rose 14.8 per cent during August. According to the detailed ABS contribution tables, fuel added approximately 0.46 percentage points to the monthly CPI.
Total CPI increased by only 0.42 percentage points.
In other words, automotive fuel accounted for about 111 per cent of the net increase in consumer prices. Everything else in the CPI basket, taken together, slightly offset the fuel increase.
The reasons are unusually identifiable.
World oil prices have risen following disruption to global energy markets. At the same time, the remaining temporary reduction in Australian fuel excise ended on 3 August. The ABS identifies both factors as contributing to the increase.
Fuel also explains most of the apparent acceleration in annual inflation.
Annual CPI increased from approximately 3.45 per cent in July to 3.96 per cent in August using the unrounded ABS contribution data — an increase of 0.51 percentage points.
The contribution from automotive fuel increased by approximately 0.45 percentage points between those two months. That means fuel alone explains about 89 per cent of the increase in the annual inflation rate.
Electricity created another important base effect. Its contribution to annual inflation rose by around 0.16 percentage points between July and August, even though electricity prices were unchanged during August itself.
Fuel and electricity therefore increased the annual inflation contribution by more than the entire increase in headline inflation. Price movements elsewhere partly offset them.
That explains an otherwise puzzling result: headline inflation jumped from 3.5 to 4.0 per cent, while trimmed mean inflation remained unchanged at 3.6 per cent.
The August CPI is therefore much less evidence of a sudden broad acceleration in prices than the headline suggests.
The more important question is what happens after the fuel shock is stripped away.
Unfortunately, that story is less reassuring: underlying inflation remains too high.
| Fuel explained more than 100% of August inflation | ||||||||||||
| Automotive fuel prices jumped 14.8% in August and contributed more to CPI than the total increase in consumer prices. | ||||||||||||
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| How August's inflation increase adds up | ||||||||||||
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| Why fuel prices surged | ||||||||||||
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| Headline inflation jumped — underlying inflation did not | ||||||||||||
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| Source: Australian Bureau of Statistics, Consumer Price Index, Australia, August 2026. Benchmark Analytics calculations using ABS CPI contribution tables. Figures use unrounded index-point contributions and may differ slightly from published rounded percentage changes. |