Hopes of early Christmas present as monthly inflation drops
Australians may be in for an early Christmas present with some economists suggesting inflation has peaked earlier and lower than expected.
There is hope for cautious optimism today after inflation fell to 6.9 per cent in October, well below market expectations, down from 7.3 per cent in September.
Annual inflation had been forecast to rise 7.6 per cent month-on-month, but a big fall in the costs of fruit and vegetables instead led to a fall.
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New figures show inflation has slowed but there are warnings it may be a false peak for households struggling with the cost-of-living crisis. A Current Affair
But some economists have warned the latest figures may be a false peak for households struggling with the cost-of-living crisis because they don't take into account power bills.
They also don't yet fully reflect the impact of the floods on fruit and veg prices.
The new figures are set to affect interest rates when the Reserve Bank board meets next Tuesday.
It is expected to deliver a rate hike, but economists say the new inflation figures mean it should be a normal 0.25 percentage point interest rate rise, instead of a higher one.
The nation's cash rate currently sits at 2.85 per cent following seven consecutive rises.
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Economists warn the new inflation figures don't take account of the impact of the floods on fruit and veg prices. Nine
Treasurer Jim Chalmers said the slight fall was welcome, but the government was expecting more prices pressure to lift inflation.
"The October result is yet to fully reflect the impact of the floods on grocery prices or the hit to energy bills caused by the war in Europe and the Coalition's decade of policy chaos."
"There are reasons to be carefully optimistic we are getting near the inflationary peak, but we're not there yet."
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