Historic quarter for Australia’s economy

The Consumer Price Index (CPI) fell 1.9 per cent in the June 2020 quarter, the largest quarterly fall in the 72-year history of the CPI and the first time annual deflation had been recorded since March 1998. All due, of course, to COVID-19.

The fall was mainly due to free child care (-95.0 per cent), which was in response to the pandemic, a significant fall in the price of automotive fuel (-19.3 per cent) and a fall in pre-school and primary education (-16.2 per cent), with free preschool being provided in New South Wales, Victoria and Queensland.

If not for these three components, the CPI would have risen 0.1 per cent.

Rents recorded their first quarterly fall on record (-1.3 per cent), while there was a record quarterly fall in household spending (-12.1 per cent).

Some CPI components recorded notable price rises on the back of increased spending. These included: cleaning and maintenance products (+6.2 per cent), other non-durable household products including toilet paper (+4.5 per cent), furniture (+3.8 per cent), major household appliances (+3.0 per cent) and audio, visual and computing equipment (+1.8 per cent).

Inflation reached a six-year high of 2.2 per cent in the March quarter, attributed partly to the impact of drought and bushfires on food products. But the latest figures put the annual inflation rate for the year to the June quarter at -0.3 per cent.

Single homeowners with private income experienced a 2 per cent drop in the cost of living, followed by couple and single homeowners receiving a full or part Age Pension (-1.9 per cent), couple homeowners with private income (-1.7 per cent) and renters receiving an Age Pension (-1.2 per cent).

*Percentage and dollar changes compared with March quarter figures. 

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