Food prices increase as drought hits Australian supplies, with inflation rising to 1.8% | Deal

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Inflation figures for the December quarter have risen a bit and most analysts expect the Reserve Bank to delay a rate cut.

Annual inflation rose 0.1% to 1.8%, which the RBA board can consider when it meets on Tuesday. The 1.8% figure is just below the Reserve’s preferred range of 2.0% to 3.0%.

The increase for the quarter was 0.7%, greater than the 0.5% gain for the September quarter.

BIS Oxford Economics chief economist Sarah Hunter said the data was in line with expectations and followed strong employment figures. “It is unlikely that we will see a cut in the cash rate on Tuesday,” he said.

Ernst & Young chief economist, Jo Masters, agreed that the Reserve would probably keep rates on hold.

Tobacco (8.4%), national vacations, travel and accommodation (7.3%) recorded the largest price increases, said the Australian Bureau of Statistics.

The drought is causing Australians to pay more at the supermarket.

The price of the fruit had the highest peak, 6.8%, which was also due to a lower seasonal offer.

Overall, food prices increased 1.3%. Pork (4.7%), beef (2.9%) and cheese (2.4%) had the following biggest price increases.

The biggest price drops were holidays abroad, travel and accommodation (2.9%), women’s clothing (2.5%) and wine (1.6%).

Masters noted that many retailers seemed to be offering discounts.

Prices of home textiles fell 3.7% and furniture 1.4%.

Housing prices increased 0.1% during the quarter.

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