Deflation arrives
Yet another inflation target miss was recorded for the June quarter.
Nothing too earth-shattering there - the target has consistently been missed for years - but this one was a real corker, with headline inflation down by -1.9 per cent in the June 2020 quarter.
And now the annual inflation rate has also turned negative, which a true rarity.
Stated the ABS:
'Since 1949, this was only the third time annual inflation has been negative.
The previous times were in 1962 and 1997-98.'
Underlying inflation was pretty flat for the quarter.
Grattan recently produced a fairly damning indexed chart showing how inflation would've tracked higher had the target been hit over the past five years versus the actuals, a period through which there's been a persistent output gap, weak wages growth, and oodles of spare labour force capacity.
We're still getting no closer to the inflation target then.
The CBD rental markets were hit with a swathe of Airbnb and student rentals in the June quarter, and the rental price index also turned negative year-on-year...for the first time ever.
There will be something of a bounce in Q3 in some categories, and truthfully there weren't too many surprises here, but overall there's a long way to go before things recover.
Detailed report as always from from James Foster here.
