Australia Q1 Inflation Rate at 2-1/2-Year Low of 1.3%


The annual inflation rate in Australia fell to 1.3 percent in the first quarter 2019 from 1.8 percent in the previous period and missing market expectations of 1.5 percent. It was the lowest inflation rate since the third quarter 2016, amid a slowdown in petrol and housing prices.

Year-on-year, cost of housing advanced 0.8 percent in the first quarter of 2019, easing from a 1.5 percent rise in the preceding period, mainly due to rents (0.4 percent vs 0.5 percent) and new dwelling purchase by owner-occupiers (1.2 percent vs 1.8 percent). In addition, cost of transport was flat, after a 2.8 percent gain in the December quarter, of which automotive fuels (-3.5 percent vs 6.7 percent). Also, prices slowed for alcoholic and tobacco (6.4 percent vs 6.8 percent); health (3.1 percent vs 3.3 percent); recreation and culture (0.9 percent vs 1.7 percent); and insurance and financial services (1.1 percent vs 1.5 percent). Additionally, cost dropped further for communication (-4.6 percent vs -4.3 percent) and continued to fall for furnishings, household equipment and services (-0.8 percent, the same as in Q4). 

In contrast, prices of food and non-alcoholic beverages increased by 2.3 percent, accelerating from a 1.5 percent rise in the prior quarter. It was the highest food inflation since the September quarter of 2014, mostly driven by meat and seafoods (4.2 percent vs 2.4 percent in Q4); dairy and related products (1.2 percent vs 1.1 percent); and fruits and vegetables (5.8 percent vs 1.6 percent). Also, cost of education went up at a faster pace (2.9 percent vs 2.7 percent in Q4) while prices of clothing and footwear declined less (-0.1 percent vs -0.7 percent).

RBA Trimmed Mean CPI rose 1.6 percent year-on-year in the three months to March, slowing from a 1.8 percent increase in the previous quarter and slightly below market forecasts of 1.7 percent. Quarter-on-quarter, the index advanced by 0.3 percent, following a 0.4 percent gain in the last quarter of 2018 and a below market estimates of a 0.4 percent rise. RBA Weighted Mean CPI went up 1.2 percent year-on-year, easing from a 1.7 percent gain in the December quarter and missing forecasts of 1.6 percent.

On a quarterly basis, consumer prices were flat in Q1, after a 0.5 percent increase in the previous three months and missing markets consensus of 0.2 percent. It was the lowest quarterly inflation rate in three years, as upward price pressure of a number of goods and services was fully offset by a number of price falls. This was consistent across most of the capital cities. The most significant rises in this quarter were vegetables (7.7 percent), secondary education (4.2 percent) and motor vehicles (2.4 percent). These rises were offset by falls in automotive fuel (-8.7 percent), domestic holiday, travel and accommodation (-3.8 percent) and international holiday, travel and accommodation (-2.1 percent).

Australia Q1 Inflation Rate at 2-1/2-Year Low of 1.3%


ABS l Rida Husna | rida@tradingeconomics.com
4/24/2019 9:37:20 AM