A shocking fall in wholesale costs has increased the possibility of reducing interest rates in coming months, economists say. The Bureau of Statistics of the last "Producer Price Index (PPI), which is a measure of prices paid by businesses fell by 0.3 percent in the March quarter from the earlier quarter, as the prices of domestically produced goods declined by 0 , 1 percent and the cost of imported goods declined by 1.5 percent.
It was the first quarterly decline in more than three years ago; most economists had expected an increase of 0.4 percent in the period.In the 12 months to March, the price growth slowed to 1.4 percent, the lowest annual rate since June 2010.
In a note to investors, said TD Securities head of Asia-Pacific Research Annette Beacher the decline in inflation in the economy to a large extent by the strong Australian dollar. She said that inflationary pressures were imported inflation cut down by chemical production and heavy machinery - this is a good time to bulk-import machinery, because of the high Australian dollar.
Westpac economist Justin Smirk said the figures, the probability that the numbers of the Bureau of Consumer Prices tomorrow will be a significant increase in consumer inflation reducing to show. With the Reserve Bank indicating that keeps a watchful eye on the Consumer Price Index (CPI), as he weighs his next train in interest rates, said Mr Smirk the case of a rate cut is being said.
After his last board meeting, the Reserve Bank indicated that, if the CPI illustrated increase was soft, the prime rate could facilitate. Ms Beacher said the latest figures were largely of interest because of the forceful spotlight on the possibility of a rate cut next month, despite business that inflation will not be linked more closely to customer price rises.
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