Part of this was clearly related to the decline in the housing sector and part to difficulties which small business was having in adapting to the administration of the GST. But, by January 2001, there was another piece of data pointing to an additional factor. Paradoxically, it was the unexpectedly good performance of the CPI in the December quarter.
The second half of the year had seen three strong cost-push inflationary pressures - the GST adding 10 per cent to many prices; an exchange rate which had fallen 15 per cent over the first ten months of 2000; and a world petroleum price which was 87 per cent higher (in terms of Australian dollars) than eighteen months earlier.