The Australian economy continues to weather global uncertainly, with inflation edging upwards to 1.7 per cent in the Consumer Price Index for the year to September.
“Although inflation remains outside the Reserve Bank’s target range of 2% to 3%, it is promising to see the September quarter Consumer Price Index improve from a low of 1.3% in the March quarter and 1.6% in the June quarter,” Australian Chamber of Commerce and Industry Chief Economist Ross Lambie said.
“This is despite global uncertainty – driven by the US-China trade and technology dispute, Brexit, protests in Hong Kong and tensions in the Middle East – presenting a significant risk to the Australian economy. “
The low inflationary environment is not unique to Australia, with low inflation the norm in many developed counties in recent years.
“We urge the government to keep its focus on achieving the Budget surplus and continue to identify opportunities for productivity-enhancing economic reform,” Dr Lambie said.
“It is important we look for reforms which increase the competitiveness of SMEs and encourage businesses to take risks, invest, grow and create jobs.”
Dr Lambie said the relatively low level of inflation suggests the Australian economy is still to experience the full impact of the personal tax cuts delivered in July and the Reserve Bank’s recent decision to lower the cash rate to 0.75%.
“We would hope to see these measures reflected in improved economic conditions in the next few months.
“The downturn in the housing market over the past year has weighed heavily on consumer confidence and held back household spending. However, there are signs the housing sector has turned the corner in recent months, with a modest improvement in Sydney and Melbourne house prices. Lower interest rates should assist the housing sector to build momentum, which will flow through to household spending.”