This measure may slip for a time as we drop off some of the high quarterly growth rates from our calculations, but we think growth will remain robust over the next 12 months. Similarly, the quite lengthy period during which inflation was undershooting our target seems to have come to an end.
The CPI inflation rate would already be a bit over 2% apart from the Government’s reduction in the Health Rebate Levy. Although some of this result has been due to rises in oil prices, measures of underlying or core inflation, which are largely unaffected by oil prices, have also risen by about 2% over the past 12 months.