Pressure is mounting on the RBA to cut interest rates even further. Figures released by the Australian Bureau of Statistics on Wednesday show the consumer price index (CPI) – a key indicator of inflation – came in at a disappointing 1.7 per cent. Economists had been hoping for the rate of 2 – 3 per cent.

The cost of Australian goods and services was also lacklustre, rising only 0.2 per cent.

The ABS explained these poor figures as resulting from a massive 6.8 per cent in petrol prices. Lower petrol price haven’t translated into higher consumption of goods and services. Rather the Australian public seem still be reeling from the record post-Christmas buying frenzy, and keeping a tight rein on their purchasing. Any saving in transport costs, from a lower oil price, is simply being absorbed as profit without it stimulating the economy as it was hoped.

But underlying inflation heartened the financial community. Its rise was stronger than predicted, 0.7 per cent in the December quarter, for an annual rate of 2.25 per cent.

But for an economy struggling to re-energise itself, these figures are not enough. High unemployment, interest rate cuts from other central banks, and an Aussie dollar still a little higher than many would like will put pressure on RBA governor Glenn Stevens to do something he’d rather avoid: Cut the lending rate even more.

About The Author

Someone you can depend on to respect you and care for your dog. Let me help you give your dog the life it deserves.

Leave a Reply

Your email address will not be published.