Inflation misses target on downside
Inflation missed yet again for the December 2018 quarter, to sit at 1.8 per cent for the year at the headline level.
The analytical measures also slowed, with trimmed mean inflation of 1.84 per cent, and the weighted median reading slowing to just 1.70 per cent.
This is the slowest rate of underlying inflation for 7 quarters, with the two-quarter annualised pace slowing even further still.
Inflation excluding volatile items was only 1.6 per cent.
Rental price inflation slowed to the lowest level since 1993 at 0.5 per cent.
In Perth the rental CPI index is down by more than 21 per cent since 2014, and is still falling.
The wrap
For three years now inflation has been at or below the bottom of the target 2 to 3 per cent range.
Further, there doesn't seem to be much prospect of the target being hit any time soon, although forecasts always seem to have CPI getting back there eventually.
In short, there was another leap in the price of tobacco, and some fruit prices were up due to the drought.
For three years now inflation has been at or below the bottom of the target 2 to 3 per cent range.
Further, there doesn't seem to be much prospect of the target being hit any time soon, although forecasts always seem to have CPI getting back there eventually.
In short, there was another leap in the price of tobacco, and some fruit prices were up due to the drought.
But there was weakness across a wide range of household goods, computing equipment, clothing and footwear, telco services, health costs, petrol, and more.
Fuel prices will drag further in the first quarter of 2019.
Fuel prices will drag further in the first quarter of 2019.
Overall, inflation is both slow and slowing, and there is plenty of headroom for interest rates to be cut if deemed necessary in 2019 (which financial markets believe to be increasingly likely).
