The end of the federal government's free child care package introduced at the height of the coronavirus pandemic lockdown has caused a massive spike in inflation.
The consumer price index jumped 1.6 per cent in the September quarter, rebounding from the record 1.9 per cent drop in the previous three months when the child care package was first introduced.
It still left annual inflation at a meagre 0.7 per cent after declining 0.3 per cent in the year to June.
The Australian Bureau of Statistics said the cost of child care added 0.9 percentage points to CPI, and was the largest contributor.
Excluding the impact of child care, the CPI would have risen 0.7 per cent.
There was also a 9.4 per cent rise in fuel prices following a rebound in world oil prices.
Underlying inflation - which smooths out wild price swings and is closely monitored by the Reserve Bank of Australia in terms of monetary policy - also remained subdued.
Various measures of underlying inflation averaged a 0.35 per cent rise in the September quarter for an annual rate of 1.25 per cent - well below the RBA's two-three per cent target band.
Australian Associated Press
