In this series we explore what consumers can expect from the big ticket items - petrol, power and groceries - in the year ahead.
Posted on Thursday, January 29, by bill Despite missing out on the recession associated with the GFC, Australia is now following the rest of the world down the Inflation rate in australia inflation route.
The December-quarter inflation rate was 0. Recall that the September-quarter inflation rate was 0. Various measures of inflationary expectations are also flat or falling, including the longer-term, market-based forecasts.
The benign inflation outlook provides plenty of room for further fiscal stimulus.
The summary results for the December-quarter are as follows: The Trimmed mean series rose by 0. The Weighted median series rose by 0. The most significant offsetting price falls this quarter were for automotive fuel Automotive fuel fell in December Global oil markets continue to experience oversupply, which resulted in continued falls in oil prices.
Trends in inflation The headline inflation rate increased by 0. The following graph shows the annual headline inflation rate since the first-quarter The black line is a simple regression trend line depicting the general tendency. As noted above, the December-quarter decline in inflation is mostly the result of falling petrol prices although the overall moderation in economic activity has also been a source of lower inflation.
The rise in tobacco prices is down to excise price rises a deliberate policy decision.
Implications for monetary policy What does it mean for monetary policy? The RBA will well understand that the fuel price declines are outliers in the overall trend which is for a moderation of inflation.
The ABS say that: The CPI is a temporal price index for consumption goods and services acquired by Australian resident households. It is an important economic indicator, providing a general measure of price change … The principal purpose of the Australian CPI is to measure inflation faced by consumers to support macroeconomic policy decision making.
This is achieved by providing a measure of household consumer inflation by the acquisitions approach. There are various ways of assessing the general movement in prices depending on the purpose that the measure is being used for.
The document I linked to above details some of the approaches. So is a headline rate of CPI increase of 0.
To examine its lasting significance we have to dig deeper and sort out underlying structural inflation pressures and ephemeral price factors.
Instead, they use two measures of underlying inflation which attempt to net out the most volatile price movements. To understand the difference between the headline rate and other non-volatile measures of inflation, you might like to read the March RBA Bulletin which contains an interesting article — Measures of Underlying Inflation.
That article explains the different inflation measures the RBA considers and the logic behind them. The alternative trimmed-mean measures are popular among central bankers. These measures are calculated by ordering the seasonally adjusted price changes for all CPI components in any period from lowest to highest, trimming away those that lie at the two outer edges of the distribution of price changes for that period, and then calculating an average inflation rate from the remaining set of price changes.
So you get some measure of central tendency not by exclusion but by giving lower weighting to volatile elements. Two trimmed measures are used by the RBA: The special measures that the RBA uses as part of its deliberations each month about interest rate rises — the trimmed mean and the weighted median — also showed moderating price pressures.Revealing the Real Rate of Inflation Would Crash the System.
Our real-world experience tells us the official inflation rate doesn’t reflect the actual cost increases of everything from burritos. The cash rate has been unchanged at percent since the Reserve Bank of Australia last cut it in August , to support non-mining industries as an unprecedented investment in resources waned.
Inflation Rate year on a year basis % in May as compared to % in the previous ashio-midori.comion Rate increases % than the previous month. Consumer Price Index: CPI points in May and last year points in May CPI increases points in .
Watch video · Key measures of underlying inflation that drive monetary policy also held around percent, well short of the Reserve Bank of Australia's (RBA) target band of 2 to 3 percent.
Australia’s official inflation rate has risen at its slowest annual pace in nearly three years, adding pressure to the Reserve Bank of Australia to stimulate the economy.
Adding to this, China’s Producer Price Index dropped by % from February, putting the annual rate at %, the weakest level since October Economists were looking for an annual increase.