Australian Inflation Remains Low, Economy Underutilized

January 29, 2010 Taxation in Australia

Financial crisis will hurt jobs, Swan warnsNewly released Australian Consumer Price Index (CPI) figures show that the country’s inflation was 2.1 percent for the first two quarters of the current financial year, at the lower end of the Australian Reserve Bank’s (ARB) target spectrum.

Although the relatively small inflation is gladly greeted by consumers across the country, ARB economist claim that it is indicative of an economy that is not being fully utilized and has room for further growth. The newest figures, released on January 27th, represent a 0.5 percent growth in the CPI, down from 1.0 percent in September. Underlying inflation for the December quarter was 0.6 percent, 0.2 percent below the September quarter.

According to a media release by Wayne Swanson, Treasurer of Australia, the primary contributors to the rise in CPI were increases in the prices of food, housing and recreation, though these have been partially offset by continually falling costs of transportation. Recreation contributed 0.2 percent of the CPI rise figure, food and housing provided a further 0.2 percent each. The falling costs of transportation, primarily through decreases in fuel prices, detracted 0.1 percent from the figure.

According to the media release, the inflation is expected to be maintained at a moderate level. Although it went on to say that the Australian Government will aim to achieve increased levels of productivity through investment in skills, education, infrastructure of the country, alongside positive economic reforms, all of which should provide the nation with strong growth and low levels of inflation.

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