Falling prices for everything from lamb roasts to gas, and warning signs the economy is struggling, have increased pressure on the Reserve Bank to start cutting interest rates by the middle of the year.
Prices for meat and seafood, which a year ago were climbing at 5.1 per cent, have fallen by 2 per cent over the past 12 months. Gas prices were soaring by 27.1 per cent in January 2023 but have dropped 1.4 per cent. The Reserve Bank closely watches measures of underlying inflation which exclude volatile items or one-off price changes. This measure dropped to 3.8 per cent in January, a 0.2 percentage point drop.
“We expect growth in next week’s December national accounts to be quite weak – the inevitable consequence of global uncertainty, higher interest rates and cost-of-living pressures.” But KPMG chief economist Brendan Rynne said the Gregorian calendar – and the extra day that forms part of a leap year – could prevent Australia from a recession.
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