Australia Inflation Eases To 13-Year Low

Australia Inflation Eases To 13-Year Low

Inflation in Australia slowed in the June quarter to reach its lowest level in 13 years, leaving more room for the central bank to ease monetary policy.
The rate of annual inflation eased to 1.2 percent in the June quarter from 1.6 percent in the March quarter, the Australian Bureau of Statistics reported Wednesday.
This was the lowest rate of inflation since the June quarter of 1999, when the consumer price index was up 1.1 percent. Economists had forecast the rate to ease to 1.3 percent.
The core inflation measure, monitored by the Reserve Bank of Australia, rose 2 percent year-on-year. This was at the bottom end of the 2-3 percent target.
Annually, prices of food and non-alcoholic beverages fell at a faster pace of 3.2 percent. Costs of recreation and culture was 1.6 percent lower than a year ago. Price growth slowed in health, transport and communication, data showed.
However, prices picked up marginally over the previous quarter. On a quarterly basis, the CPI rose 0.5 percent following a 0.1 percent increase in the March quarter. Still, it was lower than the 0.6 percent increase expected by economists.
Increases were recorded in food and non-alcoholic beverages, alcohol and tobacco as well as clothing and footwear compared to the previous three-month period.
Official data released earlier this month showed that import prices increased 2.4 percent on a quarter-on-quarter basis during the period with weak dollar pushing up prices of fuel and pharmaceutics. Producer prices also rebounded, rising 0.5 percent over the quarter.
The RBA expects overall inflation, abstracting from the effects of the carbon price which came in to force on July 1, to be consistent with the target over the coming one or two years.
During the July meeting of the RBA Policy Board, the cash rate was left unchanged at 3.5 percent. The central bank has reduced the interest rate by a cumulative 125 basis points since November last year.


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