Today's Consumer Price Index (CPI) result shows a continued broad based easing in inflation, reflecting an economy that is still being impacted by the global recession.
Annual inflation moderated in the September quarter, with the CPI growing by 1.3 per cent over the year, its lowest rate in 10 years. Underlying inflation also continued to ease, falling from 3.9 per cent in the June quarter to 3.5 per cent in the September quarter, although the quarterly result was unchanged from June at 0.8 per cent.
Quarterly growth in the CPI was 1.0 per cent, impacted by strong rises in utility prices that contributed 0.4 of a percentage point to quarterly growth. This was driven by some unusually large increases in electricity prices charged by state energy providers, along with a strong rise in the price of water and sewerage utilities.
In total, the housing group of the CPI contributed 0.6 of a percentage point to quarterly inflation reflecting solid growth in rents and property related charges, supplementing the sharp rise in the price of utilities.
Automotive fuel prices rose by 4.0 per cent in the quarter, but are still 19.0 per cent lower through the year as a result of previous price falls. Automotive fuel contributed 0.1 of a percentage point to headline inflation in the September quarter.
There were offsetting falls in food prices, which detracted 0.1 of a percentage point from headline inflation, with the price of fruit and vegetables falling by 5.5 per cent in the September quarter, following a similarly strong fall in the June quarter.
Inflation has moderated significantly over the past year, with the severe global recession resulting in a substantial reduction in demand pressures in the Australian economy. Annual headline inflation has decreased from 5.0 per cent a year ago to 1.3 per cent currently. Inflation is expected to remain low over the near term, as the full impacts of the global recession continue to be felt in the domestic economy, which is expected to operate below capacity for some time.
28 October 2009