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(Australian Associated Press)
Annual inflation inched higher to 1.7 per cent in the September quarter amid signs the lower Australian dollar is helping offset the impact of soft consumer demand.
Quarterly inflation fell to 0.5 per cent in the three months to September 30, in line with market expectations, but annual inflation rose from 1.6 per cent three months earlier and edged closer to the Reserve Bank’s preferred 2.0 to 3-0 per cent range.
The most significant rise in costs for the September quarter was international holiday, travel and accommodation, where prices – which are vulnerable to currency fluctuations – rose by 6.1 per cent.
Clothing and footwear prices also increased by 1.0 per cent in the quarter, despite subdued consumer demand, suggesting falls in the Australian dollar that followed the RBA’s three recent cash rate cuts were having an effect.
The Australian dollar rose from 68.51 US cents to as high as 68.72 after the data was released by the Australian Bureau of Statistics on Wednesday, as market expectations of a November rate eased.
“(But) today’s data provided few surprises and inflation is expected to remain below the RBA’s target range in the near term,” BIS Oxford Economics senior economist Sean Langcake said.
“We expect rates will remain on hold through the rest of the year, but a further easing is likely in early 2020 if the labour market underperforms.”
NAB economists still expect the RBA to cut to a fresh low 0.5 per cent in December.
Tobacco was the next biggest contributor to inflation with a 3.1 per cent rise, followed by childcare and property rates and charges – both at 2.5 per cent.
Fuel prices fell by 2.0 per cent, vegetables by 2.5 per cent and fruit by 3.1 per cent.