The Reserve Bank and market economists are near agreement that inflation remained tame in the fourth quarter, keeping intact expectations that the official cash rate doesn’t need to rise from a record low until March.
The consumers price index fell 0.1 per cent in the final three months of 2013, for an annual rate of 1.5 per cent, according to a Reuters survey of 11 economists. The Reserve Bank forecast a 0.2 per cent decline in the quarter for an annual 1.4 per cent in its December monetary policy statement. The data is due for release on Jan. 21.
Fourth-quarter inflation is typically weak because of a seasonal decline in fruit and vegetable prices. The latest quarter was also characterised by a decline in prices of petrol and diesel, while the trade-weighted index near a record high has ensured tradables inflation has been non-existent. That means the Reserve Bank’s focus is on strength in non-tradable inflation, especially from a resurgent housing market.
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