Annual inflation negative for the third time ever: Pete Wargent
Pete WargentDecember 17, 2020
EXPERT OBSERVER
Yet another inflation target miss was recorded for the June quarter.
Nothing too earth-shattering there - the target has consistently been missed for years - but this one was a real corker, with headline inflation down by -1.9 per cent in the June 2020 quarter.
And now the annual inflation rate has also turned negative, which a true rarity.
Stated the ABS:
'Since 1949, this was only the third time annual inflation has been negative.
The previous times were in 1962 and 1997-98.'
Underlying inflation was pretty flat for the quarter.
Grattan recently produced a fairly damning indexed chart showing how inflation would've tracked higher had the target been hit over the past five years versus the actuals, a period through which there's been a persistent output gap, weak wages growth, and oodles of spare labour force capacity.
We're still getting no closer to the inflation target then.
The main contributors to the weakness over the quarter included declining childcare and fuel prices.
The CBD rental markets were hit with a swathe of Airbnb and student rentals in the June quarter, and the rental price index also turned negative year-on-year...for the first time ever.
There will be something of a bounce in Q3 in some categories, and truthfully there weren't too many surprises here, but overall there's a long way to go before things recover.
Detailed report as always from from James Foster here.
PETE WARGENT is the co-founder of AllenWargent property buyers and a best-selling author and blogger
Pete Wargent
Pete Wargent is the co-founder of BuyersBuyers.com.au, offering affordable homebuying assistance to all Australians, and a best-selling author and blogger.