Australia: Inflation drops to lowest level in 13 years
August 16, 2012
In the second quarter, consumer prices rose 0.5% over the previous quarter, which was above the 0.1% increase recorded in the first quarter but below market expectations of a 0.6% increase. Higher prices for clothing and footwear, furnishings and household equipment as well as for healthcare were only partially offset by lower prices for recreation and culture as well as for communication. Despite the quarterly increase, annual headline inflation plunged from 1.6% in the first quarter to 1.2% in the second, which represents the lowest reading since the second quarter of 1999. As a result, annual average inflation fell to 2.3% in Q2, down from 2.9% in the previous three-month period and marking its lowest level in two years. The Reserve Bank of Australia (RBA) sees inflation ending this year at 3.25%. The RBA maintains a medium-term annual average inflation target of 2.0% - 3.0%.