In annual terms, underlying inflation was higher than this, reflecting the higher quarterly outcomes in the early part of 2009. Looking forward, we expect broadly similar outcomes over the next year or so to that recorded in the December quarter, as the lagged effects of the slowdown in wage growth last year and the appreciation of the exchange rate work their way through.
As set out in our latest Statement on Monetary Policy, we expect inflation in both headline and underlying terms to be around 2½ per cent in 2010, and just a little higher in 2011.