Australian inflation would be close to zero without ciggies, power, petrol and beer

In Pictures Ltd./Corbis via Getty ImagesCPI expressed as part of the annual Birdsville races.

Australian consumer price inflation (CPI) grew by 1.9% in the year to March, according to the Australian Bureau of Statistics (ABS),

However, had it not been for just a few specific categories, CPI would have been close to flat.

Nothing quite demonstrates that point that the chart below from Macquarie Bank.

Source: Macquarie Bank

It shows Australia’s year-on-year CPI rate overlaid against the contribution from higher tobacco, electricity and gas, fuel, beer, medical and new housing construction costs.

Some are necessities while others, to some, could be easily deemed to be just as important.

Continuing a theme seen for just over three years, the vast bulk of Australia’s annual CPI increase came from just those six categories.

According to the ABS, alcohol and tobacco prices grew 7% over the year, close to double the 4.2% increase in medical costs. New housing construction costs also increased by 3.3% over the same period.

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