The Australian Bureau of Statistics figures show inflation rose 0.5% in the September quarter, putting the rate for the year to September at 2.3%.
That’s a fall from 3% in the year to the June quarter.
Keeping upward pressure on inflation, fruit prices have skyrocketed 14.7% over the quarter. Housing and property rates and charges were also up.
But a 5.1% fall in electricity prices and a 2.5% fall in the cost of petrol have helped keep the overall figure down and well within the Reserve Bank’s target range of 2-3%.
JP Morgan economist Tom Kennedy said the figures were in line with market expectations, though there was a surprising rise in fruit prices, which were up 15 per cent.
He said it was surprising that the removal of the carbon tax didn't have a bigger impact on the figures.
"Electricity was a little bit better than we had expected, it fell five per cent but we were looking for a larger decline than that mainly because of the carbon tax repeal implications," Mr Kennedy said.
"But the unwinding of the carbon tax will take more than one quarter, so I'd expect to see some residual effect also in the fourth quarter."
Mr Kennedy said the low annual inflation rate will give the RBA flexibility when making interest rate decisions.
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