SYDNEY (Reuters) - Australian consumer prices cooled a notch last quarter, underscoring the challenge the country’s central bank faces in bringing back inflation and interest rates to what is considered ‘normal’ levels.
The headline consumer price index (CPI) rose 0.5% in the September quarter, matching economists forecasts but slowing from 0.6% gain in the previous three-month period.
Annual CPI inflation climbed 1.7%, also matching expectations, data from the Australian Bureau of Statistics (ABS) released on Wednesday showed.
Closely watched measures of core inflation undershot the central bank’s 2% to 3% target band for a 15th straight quarter, the longest stretch since the series began.
The most significant price falls in the quarter were automotive fuel and fruits and vegetables, while international holidays, tobacco and childcare had the largest increases.
Prices for utilities and new dwelling purchases by owner-occupiers both fell slightly through the year to the September quarter, while rents recorded only a small rise.
“Annual inflation remains subdued partly due to price rises for housing-related expenses remaining low, and in some cases falling in annual terms,” Bruce Hockman, chief economist at the ABS, said.
In a bid to revive stubbornly low inflation and slowing economic growth, the Reserve Bank of Australia (RBA) has chopped interest rates by 75 basis points since June to an all-time low of 0.75%.
Lower lending rates have over the past couple of months helped boost sentiment in the housing market where prices had been in a downfall since 2017 though activity elsewhere remains subdued.
But that has yet to have an impact in government data.
In the third quarter, one of the RBA-favoured measures of inflation - trimmed mean - rose 0.4%, unchanged from the prior quarter. On an annual basis, it held at 1.6% against the RBA’s target band of 2% to 3%.
The two key measures of underlying inflation - trimmed mean and weighted median - also undershot the RBA’s goal, averaging around 1.4% for the year.
Reporting by Swati Pandey; Editing by Edwina Gibbs