Inflation up ahead of RBA rates decision

Steven Deare
(Australian Associated Press)

 

Inflation figures for the December quarter have nudged higher and most analysts expect the Reserve Bank will delay a rate cut.

Annual inflation climbed 0.1 per cent to 1.8 per cent, which the RBA board may consider when it meets on Tuesday.

The 1.8 per cent figure is just below the Reserve’s preferred 2.0 to 3.0 per cent range.

The rise for the quarter was 0.7 per cent, greater than the 0.5 per cent gain of the September quarter.

BIS Oxford Economics chief economist Sarah Hunter said the data was in line with expectations and followed strong employment figures.

“It’s unlikely that we’ll see a cut in the cash rate on Tuesday,” she said.

Ernst & Young chief economist Jo Masters agreed the Reserve was likely to keep rates on hold.

Tobacco (8.4 per cent), domestic holidays, travel and accommodation (7.3 per cent) recorded the greatest price rises, the Australian Bureau of Statistics says.

The drought is causing Australians to pay more at the supermarket.

The price of fruit had the biggest spike – 6.8 per cent – which was also due to lower seasonal supply.

Overall, food prices were up 1.3 per cent.

Pork (4.7 per cent), beef and veal (2.9 per cent), and cheese (2.4 per cent) had the next biggest price rises.

The biggest price falls were overseas holidays, travel and accommodation (2.9 per cent), women’s clothing (2.5 per cent) and wine (1.6 per cent).

Ms Masters noted many retailers appeared to be offering discounts.

Household textile prices dropped 3.7 per cent and furniture by 1.4 per cent.

House prices increased by 0.1 per cent for the quarter.

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