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1.9 per cent CPI drop the biggest in 72 years

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The prices paid on consumer goods dropped by 1.9 per cent in the June quarter – the largest fall in the 72-year history of the Consumer Price Index.

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The result was mainly the result of free child care and pre-school policies in several states, as well as a 19.3 per cent slide in the price of petrol.

“Excluding these three components, the CPI would have risen 0.1 per cent in the June quarter,” Australian Bureau of Statistics chief economist Bruce Hockman said.

The result was largely in line with economists expectations for inflation to drop by around 2.0 per cent.

There were, however, notable increases in the prices of certain goods.

The price of cleaning supplies rose 6.2 per cent, non-durable household good prices such as toilet paper increased 4.5 per cent, furniture prices rose 3.8 per cent, and household appliance prices increased by 3.0 per cent.

“High demand saw a reduction in specials and genuine price increases on a range of long-life products such as canned tuna and canned meat, rice and pasta,” the ABS said.

Overall the annual inflation rate was a negative 0.3 per cent in the year to June, just the third time since 1949 that annual inflation has been negative.

The other two times were in 1962 and 1997-98, Hockman said.

By 1155 AEST, the Australian dollar was buying 71.65 US cents after initially dropping following the inflation announcement. It is still higher from 71.32 US cents at Tuesday’s close.

-AAP

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