SYDNEY – Australia’s annual inflation fell negatively for the first time in 22 years to the second quarter as government childcare subsidies and lower oil prices led to the biggest quarterly decline on record.
According to the official Australian Bureau of Statistics, the country’s consumer price index fell by 1.9% from three months to 30 June. Annual inflation fell to 0.3% from 2.2% three months earlier.
ABS said the government’s move to free childcare from 6 April was Australia’s first annual deflationary print’s biggest driver since March 1998 as a reaction to the economic hit of coronovirus.
The largest area in prices came from an 11% drop in household goods and services, including a 95% drop in childcare costs due to subsidies.
Fuel prices fell 19% in this quarter, while education costs also declined.
ABS chief economist Bruce Hockman said the total CPI would have risen 0.1% in the quarter without those three factors.
The cost of food and non-alcoholic beverages rose by 0.5% as vendors reduced the discount as demand for long-life items such as canned and dry goods increased.
The rebound is likely in the third quarter, with a childcare-subsidy plan ending July 12.
In a record 72 years, Australia had annual deflation on only two previous occasions in 1962 and 1997–98.
Write to Stuart Condi at [email protected]