As you've been hearing services inflation, like the cost of power and rent, has been a big factor in price rises.

David W has asked why Australia is a services economy.

Thanks for your question David and your patience!

Australia does manufacture products, but services dominate economic activity in Australia, a sign of a maturing economy.

The Productivity Commission says services now account for 80 per cent of production, and 90 per cent of employment in Australia. 

Seventy years ago, nearly half the workforce was in agriculture or manufacturing, while now the figure is less than 10 per cent.

That's why we depend heavily on imports of both capital and consumer goods.

The Reserve Bank says that manufacturing's share of total production is just under 6 per cent, while education's output is 13 per cent.

Services industries don't rely on the sale of products to make a profit, like manufacturing, agriculture and mining, instead they offer non material goods and products such as education, customer service, finance, plumbing, and health care. 

In addition, services exports account for around 45 per cent of export earnings, including education and tourism.

This graph from the Productivity Commission shows hows the services industry dominates the Australian economy.