Some industrial costs continuing to rise despite slowing CPI: Ai Group

Although the consumer price index (CPI) slowed to 2.8 per cent this week, Australian Bureau of Statistics figures show that inflation is also “re-accelerating in some parts of the industrial ecosystem”, employer representative the Australian Industry Group (Ai Group) has said.

In a statement on Friday, Ai Group Chief Executive Innes Willox called slowing consumer inflation “good news”, but it was tempered by “the concerning return of cost pressures for Australian manufacturers”.

ABS data released on Friday – following the CPI statistics on Wednesday – shows producer prices slowed from 4.8 per cent to 3.9 per cent per annum, but manufacturing input prices rose 3.8 per cent per annum in the quarter, “with the rate growing steadily over the past year.” 

Manufacturer electricity prices were up 4.7 per cent per annum as coal price caps expired, with transport and warehousing prices “show[ing] a similar pattern”, noted the Ai Group.

“This data suggests that the supply-side constraints driving much of Australia's inflation challenge clearly remain in key industrial sectors,” said Willox.

“Our manufacturers in consumer-facing sectors now face the challenge of moderating consumer price growth on the sales side alongside accelerating inflation on the input side.”

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