- Annette Beacher, head of Asia-Pacific research at TD
The malaise of low inflation is gradually spreading around the world, slowly creeping to the South Pacific country. A private reading of Australian inflation dropped to the slowest pace in more than two years in December as petrol prices declined, adding to further evidence that the Reserve Bank of Australia may consider another cut in interest rates if required to prop up the nation's economy. The TD Securities-Melbourne Institute's monthly gauge of consumer prices remained unchanged in December from the previous month, when it climbed by 0.1%. Normally, December is a strong month for consumer prices; however, this time a dramatic 8.9% plunge in petrol weighed on inflation. On an annual basis, the measure fell to 1.5%, compared with 2.2% in November, the lowest reading since July 2012. Inflation excluding volatile fuel, fruit and vegetables inched higher by 0.2% in the reported month, to run at just 1.8% for the year. On top of that, measures of underlying inflation, which the RBA focuses on when setting interest rates, also showed a considerable ease in price pressures, with the trimmed mean up just 1.7% on a year earlier and down from 2.4% in November.
Another measure of the nation's economic health is motor vehicle sales, which advanced 3% to 94,903 in December, the highest level since June last year, following the 0.5% decline in the preceding month.
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