The Australian Bureau of Statistics says consumer prices fell by 1.9 percent overall in the June quarter, making it only the third time Australia has recorded annual deflation since records began. Only twice before has the slowdown in the economy caused the inflation rate to fall into negative territory: in 1962 and 1997.
The price falls have taken the annual inflation rate to 0.3 per cent. The biggest drivers of that have been a 95 per cent drop in the cost of childcare after the government temporarily made it free.
Rents for residential dwellings recorded the first quarterly fall since records began in 1972. Petrol was hit by a 19 per cent fall due to the collapse in the oil price.
The lockdowns did raise prices in other sectors. Furniture, household goods, cleaning products and toilet paper were all leading the way.
Shane Oliver, the Chief Economist at AMP Capital, inflation isn't likely to rise for the foreseeable future.
"We've got a lot spare capacity in the economy, there's a lot of competition out there. So that spare capacity in the economy means inflation is going to stay low, probably not negative, but it's going to stay low for some time to come - all of which is just a reflection of the difficult times the economy is going through right now."
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