Australian (ASX) Stock Market Forum

Deflation for the first time in 7 years

Dec 24, 2010
Australia saw deflation for the first time in seven years in the first quarter, as falling petrol, food, and clothing prices drove down the cost of a basket of goods and services.

The surprise drop in the price of a wider-than-usual range of items drove the Australian dollar down more than 1.5 per cent and could force the Reserve Bank of Australia to cut the cash rate as soon as next Tuesday, say economists.

The Australian Bureau of Statistics said on Wednesday the consumer price index (CPI) contracted 0.2 per cent in the three months to the end of March, taking the annual rate to 1.3 per cent, compared with 1.7 per cent at the end of December.

Is this well and truly the end of the boom?

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