Australia is experiencing deflation for the first time since 1960 with prices dropping by 1.9 percent in a year
Prices are falling at the steepest pace in 89 YEARS, as the worst recession since the 1930s devastates Australia – but there is a positive side if you still have a job
- Australia is experiencing deflation, where prices have fallen for the first time since 1960
- In just three months, prices fell 1.9 percent as furniture, transportation costs dropped
- Overall, consumer goods costs have fallen despite record low interest rates
- Gasoline prices fell by 19.3 percent, while childcare costs fell by 95 percent
Australia has experienced the sharpest price drop in 89 years, as COVID-19 has caused the deepest recession since the 1930s.
A phenomenon known as deflation has occurred for the first time since 1960, with prices dropping.
The Consumer Price Index, commonly known as inflation, shrank 1.9 percent in the June quarter as a result of the coronavirus pandemic, the Australian Bureau of Statistics has revealed.
This CPI measure has not gone back since 1960, but the quarterly dive was the steepest since the Great Depression of the early 1930s.
CommSec chief economist Craig James said this was the strongest quarterly decline in 89 years.
“The last time consumer prices fell 1.9 percent in a quarter – that is, over a three-month period – was in 1931,” he said.
ABS chief economist Bruce Hockman described the result as historical.
“This was the biggest quarterly decline in the CPI’s 72-year history,” he said.
Despite a wave of people working from home, furniture prices fell by 11.2 percent in just three months, while transportation costs fell by 6.8 percent as fewer people took the train or bus.
Australia faces deflation, where prices have fallen for the first time since 1960 as COVID-19 causes a deep recession
Gasoline prices also fell below $ 1 per liter, representing a 19.3 percent drop in fuel costs.
The federal government’s free childcare caused these costs to drop by 95 percent, while the free kindergarten in New South Wales, Victoria and Queensland caused a 16.2 percent drop in the cost of primary education.
Housing costs were down 0.7 percent, because landlords were not allowed to evict tenants, while education costs were down 3.7 percent with closed schools to stop the spread of the corona virus.
Australia’s first deflation episode in 60 years happened, although interest rates hit a record low of just 0.25 percent.
On an annual basis, prices have fallen by 0.3 percent – a level significantly below the Reserve Bank of Australia’s target of two to three percent, meaning it is very unlikely that interest rates will rise anytime soon.
The COVID-19 pandemic will bring the Australian economy into recession for the first time in 29 years, as the coronavirus outbreak causes the deepest recession since the Great Depression of the 1930s.
As unemployment rises, deflation is good news for those who still have jobs, with lower prices good for consumers, even if they have missed decent wage increases for several years.
Gasoline prices also fell below $ 1 per liter, representing a 19.3 percent drop in fuel costs. Depicted is a price sign in Croydon in inner-west Sydney in March