Inflation slows in 2nd half of 2019, higher-income group most affected

Inflation slowed a touch in the second half of last year compared with the first six months, with households at the top end of the income scale taking a slightly bigger hit than others, data out yesterday noted.

The overall consumer price index (CPI) for general households rose 0.5 per cent in the six months to Dec 31 over the same period in 2018. That was also a touch below the 0.6 per cent increase in the first half of the year.

If imputed rentals on owner-occupied accommodation were excluded, CPI rose 0.7 per cent in the second half of last year against the 1.1 per cent uptick in the first half.

This inflation affected the highest 20 per cent income group the most, with their overall CPI going up 0.7 per cent, the Department of Statistics said.

Inflation for households in the middle 60 per cent income segment rose 0.4 per cent, while those in the lowest 20 per cent found prices edging up 0.1 per cent.

The higher inflation for all three groups was due to pricier food, tuition, medical, transport and holiday expenses. "(These) collectively outweighed a decline in electricity cost, imputed rentals on owner-occupied accommodation, and clothing and footwear costs," noted the department.

It added that inflation rose at a slower pace for those in the lowest 20 per cent income group because they were less affected by the rise in car prices.

Cheaper power also had a larger dampening effect on inflation for this group, given that electricity costs accounted for a larger share of their total expenditure.

Increases in tuition and other fees were also less for this segment than other income groups.

Overall inflation for general households rose by 0.6 per cent last year, compared with a 0.4 per cent increase in 2018.

It was 0.3 per cent for the lowest income group, 0.5 per cent for middle income households, but 0.8 per cent for the highest earners.