Australia inflation climbs but remains below target
Australian inflation rose at the end of 2019 but remains below target despite three interest rate cuts, prompting central bank to think of new measures to revive consumer prices.
The consumer price index climbed 0.7% in the fourth quarter, which was slightly higher than the 0.6% increase forecast, attributed to higher fuel prices, cigarettes, travel, fruits, and domestic holidays.
The annual pace increased to 1.8%, but still lower than the 2-3% target of the Reserve Bank of Australia. A key measure of core inflation fell to a slower 1.6% marking below target for four years straight.
This caused the RBA to lower interest rates three times to 1.75%, an all-time low.
The central bank is set to conduct a policy meeting next week but will most likely stand pat as the unemployment rate dropped.
While rate cuts have succeeded in the revival of home prices, consumers remain saddled by slow wage growth and high debt levels.
Some of the price increase was attributed to drought and lower supplies of fruit, meat, and vegetables. Economists anticipate that the drought and the bushfires, which has darkened the mood in Australia as well as the recent coronavirus, will further push up prices in the next months.