Overall a supermarket basket of items rose in price with the notable exceptions of fruit and vegetables
Reserve Bank still has challenges as inflation remains below its target level
30 October 2019 | Staff Writers
Australia’s Consumer Price Index (CPI) rose 0.5 percent in the September 2019 quarter, according to the latest Australian Bureau of Statistics (ABS) figures. This follows a rise of 0.6 percent in the June 2019 quarter.
Annual inflation is now 1.7 percent, which is below the Reserve Bank’s target range of 2-3 percent; the level at which it believes economic decisions will not be materially distorted. Today’s release came as little surprise to the markets.
Says Michel McCarthy, Chief market strategist at CMC Markets, “The figures were broadly in line with expectations, though there was a slight miss on the median CPI expectations. It gives the Reserve Bank room to move again on rates if it wished; but the impact of this release will see the market backing away from forecasting an immediate rate cut.”
The most significant price rises in the September 2019 quarter were international holiday, travel and accommodation (+6.1 percent), tobacco (+3.4 percent), property rates and charges (+2.5 percent) and childcare (+2.5 percent).
There were other sectors showing signs of life, Michael McCarthy says, “Clothing and footwear and recreation were among the better performers. These rises suggest some pressure has eased on these sectors.”
Of quarterly price falls, the most significant were automotive fuel (-2.0 percent), fruit (-3.1 percent) and vegetables (-2.5 percent).
ABS Chief Economist, Bruce Hockman says, “Despite the price falls for fruit and vegetables this quarter, the drought is impacting on the prices for a range of food products. Prices rose this quarter for meat and seafood (+1.7 percent), dairy and related products (+2.2 percent) and bread and cereal products (+1.3 percent).”
The CPI rose 1.7 percent through the year to the September 2019 quarter. This follows a through the year rise of 1.6 percent to the June 2019 quarter.
“Annual inflation remains subdued partly due to price rises for housing related expenses remaining low, and in some cases falling in annual terms. Prices for utilities (-0.3 percent) and new dwelling purchase by owner-occupiers (-0.1 percent) both fell slightly through the year to the September 2019 quarter, while rents (0.4 percent) recorded only a small rise,” said Mr Hockman.
