Australia Inflation


Inflation inches down in Q4

In the fourth quarter, consumer prices added 0.4% over Q3. The price increase was below the 0.7% rise recorded in the previous quarter and undershot market expectations, which had seen prices adding 0.7%. Declines in clothing and footwear prices mitigated a strong jump in food prices, which included double-digit growth for prices of fruit and vegetables. Annual headline inflation dropped a notch, from 2.8% in the third quarter to 2.7% but annual average inflation inched up from 2.7% to 2.8%. Average inflation has been picking up over the previous four quarters, and this upward trend is likely to continue as the impact of the floods trickle into consumer prices. On 17 February, the Reserve Bank raised its mid-year inflation forecast from 2.5% previously expected to 3.0%, as crop damages in Queensland in the wake of the floods and the cyclone Yasi would exert additional pressures on consumer prices. Monetary authorities currently expect inflation to end the year at 3.0% and maintain a medium-term annual average inflation target of 2.0% - 3.0%.

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