Latest inflation figures signal steady interest rates

Inflation figures published by the Australian Bureau of Statistics for the December 2013 quarter show that overall inflationary pressures remain modest even though the price level rose by 0.8 per cent.

Underlying inflation (the RBA’s preferred measure of inflation) was also up by 0.9 per cent in the same quarter; however the annual rate remains almost exactly in the middle of the RBA’s target range.

This result confirms that interest rates are likely to remain at significantly low levels for the foreseeable future.

“Today’s figures add further fuel to the notion that interest rates will remain at all-time lows for a considerable amount of time to come,” said HIA Senior Economist Shane Garrett. “There is no justification to depart from current settings while inflation is under control and while economic growth continues to be below trend.

“Domestic manufacturers will be encouraged to see that import prices are coming under pressure,” remarked Shane Garrett,” he continued. “After several difficult years, they are finally starting to see their price competitiveness receive a boost.

“It is encouraging to see the rate of housing cost a little below its medium term trend rate.”

Posted by Charles Tarbey on 30/01/2014 at 12:00 AM | Categories:

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