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Cost of living comes down: Inflation falls to 5.6%

While property and rent prices are still red hot, the cost of other necessities has finally cooled down.

People walk down a busy street and Australian currency fanned out to represent the cost of living.
The cost of living appears to be easing in some areas. (Source: Getty)

The cost-of-living crisis may finally be easing, with the monthly Consumer Price Index (CPI - or fancy words for inflation) seeing an increase of just 5.6 per cent in the 12 months to May.

This month’s annual increase was the smallest since April last year and a significant drop since its peak of 7.3 per cent in December last year, according to the latest data from the Australian Bureau of Statistics (ABS).

"While prices have kept rising for most goods and services, many increases were smaller than we have seen in recent months,” ABS head of prices and statistics Michelle Marquardt said.

What’s still costing Aussies the most?

Unsurprisingly, the most significant contributors to the annual increase in monthly inflation was housing, food and non-alcoholic beverages, and furniture, household equipment and services.

The price of buying a new home rose 8.3 per cent and rent prices jumped 6.3 per cent.

“Within the housing group, new dwelling prices rose 8.3 per cent, which is the lowest annual growth since November 2021, as building-material price increases continue to ease,” Marquardt said.

“Rent price increases went up again, from an annual rise of 6.1 per cent in April to 6.3 per cent in May, as the rental market remains tight.”

Food and non-alcoholic beverage prices rose 7.9 per cent in the 12 months to May.

"The main contributor to this increase was meals out and takeaway food, which increased from 7.3 per cent in April to 7.7 per cent in May, as higher costs of ingredients, rents, utilities, and wages were passed on," Marquardt said.

Where are Aussies saving money?

Fuel prices were 8 per cent lower compared to 12 months ago. They fell 6.7 per cent in the month of May.

"The annual movement for automotive fuel remains volatile, partly reflecting price changes from 12 months ago. Annually, automotive fuel prices fell 8.0 per cent in May, compared to a rise of 9.5 per cent in April," Marquardt said.

The annual increase for holiday travel and accommodation of 7.3 per cent was lower than the April increase of 11.9 per cent.

“This is the lowest increase for holiday travel and accommodation since October 2022,” Marquardt said.

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