Summer discounting activity by fashion retailers has resulted in a -2.6% drop in clothing and footwear prices in the March 2023 quarter, Australian Bureau of Statistics (ABS) data revealed.
Footwear (-5.0%) and garment (-3.2%) prices fell, with the main contributor being garments for women (-2.1%).
Fashion prices dropped across all Australian capital cities, with Adelaide and Brisbane leading at -3.8% and -3.7% respectively. Hobart saw the lowest drop of -1.3%.
Alongside clothing, furniture, and major and smaller appliances saw a drop in prices of -4.6%, -3.8% and -3.6% respectively.
The largest drop in pricing was in international holiday and accommodation, at -8.2%, with ABS citing that some destinations entered their off-peak seasons following significant rises in recent quarters.
These dropped partially offsetted the overall Consumer Price Index (CPI), which rose 1.4% in the March 2023 quarter and 7% annually.
ABS head of prices statistics Michelle Marquardt said the quarterly rise is the lowest since December 2021.
"CPI inflation slowed in the March quarter,” Marquardt said. “While prices continued to rise for most goods and services, many of these increases were smaller than they have been in recent quarters."
The major contributors to the March quarter rise were medical and hospital services (+4.2%), tertiary education (+9.7%), gas and other household fuels (+14.3%) and domestic holiday travel and accommodation (+4.7%).
"Prices for medical and hospital services typically rise in the March quarter as GPs and other health service providers review their consultation fees, and the Medicare Safety Net is reset at the start of the calendar year,” Marquardt said. “This year, some private health insurance premiums also increased in January, adding to the price rise for medical and hospital services.”
Marquardt said tertiary education fees are also indexed at the start of the year.
"This quarter, additional strength was seen in tertiary education as changes in student contribution bands and fees introduced in 2021 as part of the Jobs-ready Graduates Package continued to flow through to the index."
Price reviews reflecting higher wholesale gas prices led to rises in gas and other household fuels, ABS said, with rises seen across all eight capital cities and the strongest rise recorded in Melbourne (+22.7%).
"This quarter's rise was notable as prices increased in all eight capital cities, whereas typically only Melbourne's prices are reviewed in the March quarter," Marquardt said. Higher prices reflected major events over the past year, including the ongoing war in Ukraine and unplanned outages at coal-fired power stations.
Strong demand for holiday travel over the school holiday period and the return of major events to some capital cities resulted in price rises for domestic accommodation. These increases were partially offset by small price falls for domestic airfares, following significant price rises in recent quarters.
Food prices also rose by 1.6%, driven by fruit and vegetables (+2.4%) and snacks and confectionary (+4.1%).
"Potato shortages due to wet weather in key growing regions late last year led to price rises for both potato crisps and frozen potato products, while higher edible oil and packaging prices also contributed to the rise for a range of snack products," Marquardt said.
"Fruit prices rose due to damaging weather in apple and avocado growing regions late in 2022, as well as typical seasonal rises for apples and citrus."
Over the past twelve months, fashion and footwear prices rose 3.2%.
Annual inflation measures
New dwellings (+12.7%), domestic holiday travel and accommodation (+25%) and electricity (+15.5%) are the major contributors to the annual inflation increase of 7%.
Marquardt said the annual increase is lower than the 7.8% rise in December 2022, and the 7.3% rise in September.
"Annual inflation for goods of 7.6% was down from the 9.5% recorded in December, due to price falls for goods such as furniture, household appliances and clothing in the March quarter, as well as automotive fuel prices easing in recent quarters,” she said.
“However, annual inflation for services was 6.1%, up from 5.5% in the December quarter and is the highest since 2001.”
Underlying inflation measures reduce the impact of irregular or temporary price changes in the CPI. Annual trimmed mean inflation was 6.6%, down from 6.9% in the December quarter.
The monthly CPI indicator rose 6.3% in the 12 months to March, following annual rises of 6.8% in February and 7.4% in January.
Marquardt said the overall movement for the monthly indicator eased for a third consecutive month in March.
“Prices for new dwellings have continued to increase, but at lower rates in recent months compared to early last year. Automotive fuel prices fell through the year (-8.2%), reflecting a year since the initial spike in oil prices when Ukraine was first invaded."