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Inflation under control says OECD

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Financial markets expected inflation to slow to 5.2 percent.

In monthly terms, prices fell by 0.4 percent – ​​the biggest one-month decline since September 2020.

Taking out volatile items such as petrol, holiday travel, fruit and vegetables, core inflation also fell sharply in the month, falling to 5.1 percent. It was at 5.5 percent in September.

One of the biggest factors in inflation, rents, fell from an annual rate of 7.6 per cent to 6.6 per cent as the federal government’s changes to Commonwealth rental assistance began to filter through the property market. . In monthly terms, rental prices decreased by 0.4 percent.

Costs for building a new home climbed nearly 22 percent in the middle of last year due to strong demand and problems in the international supply chain. That has now fallen to a 26-month low of 4.7 percent.

The annual rate of inflation for food and non-alcoholic beverages rose to 5.3 percent from 4.7 percent, but for the month, prices rose just 0.1 percent. Fruit and vegetable prices have increased, in part due to reduced supplies of melons and bananas.

People were feeling the pinch of paying more for goods at a market in Melbourne’s south on Wednesday, where shoppers acknowledged recent inflationary pressure meant accepting they would pay more for fresh produce.

Remy Muller says he buys fewer quality cuts of meat for his family of four. At $5 a punnet, he said blueberries were also left on the shelf during the store this week.

Petrol prices are also starting to drop. The annual inflation rate of automotive fuel was 19.7 percent in September but it decreased to 8.6 percent in October.

Through October, prices fell 2.9 percent after jumping 3.3 percent in September.

The monthly measure of inflation, which rose to 8.4 percent last year, could be below 4 percent by the end of the year and below wage growth for the first time in nearly two years.

Gwen Utano and her mom Rebecca Overbury go shopping. The latest inflation figures show that fruit and vegetable prices have risen, in part due to a reduced supply of melons and bananas. Credits: Jason South

The better-than-expected numbers had an immediate impact, with the ASX200 jumping in value as investors bet interest rates did not need to be pushed higher.

Financial markets, which had put the chances of a rate hike next year at 60 percent, cut that to no more than 50-50.

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Betashares chief economist David Bassanese said the inflation figures, in addition to this week’s retail trade report which showed a 0.2 per cent fall in sales in October, would give the Reserve Bank comfort that current settings are working of interest rate.

“For two days, therefore, we have received encouraging news that both consumer spending and inflation have continued to moderate, which should avoid the need for the RBA to temper the Christmas cheer with another rate hike next week,” he said.

ACTU secretary Sally McManus said the figures were confirmation the Reserve Bank must not add to the financial pressures on ordinary people being hit by businesses seeking to protect their profit margins.

“The RBA must stop exacerbating the financial stress of working people when the evidence is clear that corporate profiteering and price gouging are fueling inflation. Whenever they put interest rates up, landlords pass the pain on through higher rents,” he said.

But some analysts are not yet convinced. Deutsche Bank Australia senior economist Phil O’Donoghue said if the Reserve Bank did not raise interest rates at its board meeting on Tuesday, it would hit home buyers early in the year.

“Any delay beyond December only increases the chance that the RBA will have to hike more than once in the new year, and there will be a delay in the timing of any cuts,” he said.

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With Alex Crowe

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