SYDNEY (AFP) – Australian consumer prices rose 0.5 per cent in the three months to September, official figures showed Wednesday, as the annual rate of inflation eased after the removal of a controversial carbon tax.
The increase in the consumer price index (CPI) in the third quarter was slightly stronger than economists’ estimates of 0.4 per cent.
The new figures took the annual rate of inflation to 2.3 per cent, the Australian Bureau of Statistics (ABS) said, down from 3.0 per cent in the year to June. The year-on-year rate matched analysts’ projections.
The softer number keeps inflation within the Reserve Bank of Australia’s target range of 2.0 to 3.0 per cent and gives the central bank room to maintain its record-low interest rate of 2.5 per cent.
“There’s no smoking gun here for the RBA to change their guidance, giving them some time (to maintain) a period of stability at the present time,” Citi’s chief economist for Australia Paul Brennan told AFP.
The CPI rise was supported by a 14.7 per cent jump in the price of fruit, as well as increases in new property purchases by owner-occupiers, property rates and charges and motor vehicle service fees. Electricity prices dropped by 5.1 per cent and petrol costs slipped by 2.5 per cent.
Underlying or core inflation, which strips out volatile items and is more closely watched by the Reserve Bank, came in at 0.5 per cent for the third quarter for an annual rate of 2.55 per cent.
The Australian dollar fell slightly before recovering to trade at 87.65 US cents.
Australia’s central bank has kept the cash rate at 2.5 per cent since its last cut in August 2013 to stimulate the non-mining sectors of the economy amid an expected sharp fall-off in resources investment following an unprecedented boom.
Economists said the weakness in some components of the data reflected the current challenges facing the Australian economy as wages growth remains slow and consumer demand stays subdued.
The Australian data came amid fears over eurozone deflation, downgrades in global growth and falling commodity prices.
But analysts said deflation was less of a concern in Australia, as the recent declines in the local currency could lift the prices of some imported goods.