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Food prices rise as drought hits Australian supplies, with inflation climbing to 1.8%

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Food Prices
Food Prices

Food Prices – Most analysts expect the Reserve Bank will delay a rate cut next week with inflation just below its preferred range

Australian Associated Press

Woman shopping for vegetables
 The drought is causing Australians to pay more at the supermarket, with the price of fruit having the biggest spike. Photograph: Dave and Les Jacobs/Getty Images/Blend Images

Inflation figures for the December quarter have nudged higher and most analysts expect the Reserve Bank will delay a rate cut.

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

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

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

The Ernst & Young chief economist, Jo Masters, agreed the Reserve was likely to keep rates on hold.

Tobacco (8.4%), domestic holidays, travel and accommodation (7.3%) recorded the greatest price rises, the Australian Bureau of Statistics said.

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

The price of fruit had the biggest spike – 6.8% – which was also due to lower seasonal supply.

Overall, food prices were up 1.3%. Pork (4.7%), beef and veal (2.9%), and cheese (2.4%) had the next biggest price rises.

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

Masters noted many retailers appeared to be offering discounts.

Household textile prices dropped 3.7% and furniture by 1.4%.

House prices increased by 0.1% for the quarter.

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