“Australia’s inflation rate has edged up in the first three months this year, driven by higher fuel and health costs.
Headline inflation rose by 0.5 per cent over the first quarter to an annualised rate of 2.1 per cent.
Underlying inflation — the measure most keenly observed by the Reserve Bank, which strips out volatile factors — remained weak, edging up by 1.8 per cent over the year.
A jump of almost 6 per cent at the petrol bowser over the quarter — compared to a 10 per cent fall in the previous quarter — was the biggest contributor to the headline figure, according to the Australian Bureau of Statistics.
Hospital services, up 1.6 per cent, electricity charges, up 2.5 per cent and a 1 per cent increase in the price of owner-occupier homes were also big contributors.
Offsetting the rises were a 3.8 per cent fall in the cost of holiday travel and 6.7 per cent drop in the price of fresh fruit.
While the headline inflation rate pushes into the Reserve bank’s target 2-to-3 per cent band for the fist time since the September quarter of 2014, the result was still weaker than expected.”
What does this mean to the Australian Economy?
Core inflation is still weak allowing for a possible decrease in interest rates without putting pressure on inflation.