Inflation Falls Below 2% in September Quarter as Subdued Wages Weigh on Queensland Economy: CCIQ

Wednesday 31 October, 2018 | By: Dan Petrie

Australia’s headline inflation rate fell to 1.9% in the September quarter, below the Reserve Bank of Australia’s target inflation range of two-three per cent as subdued wages continue to weigh on the national economy.

The Chamber of Commerce and Industry Queensland (CCIQ) notes the September quarter which tends to be historically stronger following a reset in prices for the beginning of the financial new year has delivered a soft print.

CCIQ Chief Economist, Dr Marcus Smith said the September quarter had seen significant rises in the costs of travel and accommodation, automotive fuel, tobacco and fruit whilst the introduction of the Federal Government’s child care subsidy on July 2 had seen costs fall for the sector.

“The statistics provide no argument for the RBA to lift the official cash rate, as all core inflation measures remain below the RBA’s inflation target range over the medium term.”

“The statistics for the September quarter show fairly substantial rises in prices for fuel (+20.8%) and tobacco (+14%) - items for which demand is relatively inelastic to price changes - while there was also rather hefty increases to prices for items including domestic airfares and accommodation (+7.4%), fruit (+6.1%) and insurance (+4.2%).”

“Nevertheless, there is some good news for consumers, with a significant fall in prices for child care (-8.5%) due to the one-off introduction of the Child Care Subsidy as well as falls in the communications group, particularly telecommunication equipment and services (-4.7%),” Dr Smith said.  

In fact, the key annual core measure -- trimmed-mean inflation -- came in at 1.8 percent which means it has effectively remained under the central bank’s core inflation target for almost three years. 

The Reserve Bank of Australia’s private credit data did provide some respite for business lending growing 0.6% on the month and 4.4% annually while caution remains the overriding theme for potential home owners.  

CaptureGraph181031

---------------------------------------------------- ENDS -------------------------------------------------------

Dan Petrie
Media and Communications – Economy and Government
Chamber of Commerce and Industry Queensland
Ph No: 07 3192 0120 (Landline)
Dan Petrie -Mobile: 0408 919 767
Email: dpetrie@cciq.com.au

Post your comment

Comments

No one has commented on this page yet.

RSS feed for comments on this page | RSS feed for all comments