Rent prices take first quarterly fall since 1972

Inflation suffers biggest quarterly drop in history. Source Getty

This CPI measure hasn't gone backwards since 1960.

The Consumer Price Index (CPI) fell 1.9 per cent in the June 2020 quarter according to the Australian Bureau of Statistics (ABS).

The ABS Chief Economist said this was only the third time in history negative inflation had been recorded. Mr Hockman said: "Excluding these three components, the CPI would have risen 0.1 per cent in the June quarter".

The result was mainly the result of federal government's nationwide emergency free child care policy, the free pre-school that was provided in NSW, Victoria and Queensland, as well as a 19.3 per cent slide in the price of petrol as oil prices collapsed during the coronavirus crisis.

Australia's first episode of deflation in 60 years occurred even though interest rates are at a record low of just 0.25 per cent.

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In addition, the prolonged hot weather has resulted in a high demand for electricity and water, pushing prices of electricity up by 2% and prices of water up by 0.25% over the previous month.

'What today's data reinforces is that Australian businesses can be confident that borrowing costs will remain extraordinarily low for years to come, ' she said.

Independent economist and vice-chancellor's fellow at the University of Tasmania Saul Eslake said this instance of deflation - where consumer prices fall - is historically unusual because it has preceded a recession, rather than following it.

While unemployment has risen to late 1990s levels, deflation is good news for those who still have a job, with lower prices beneficial for consumers even if they have missed out on decent pay rises for several years.

New data from the Australian Bureau of Statistics (ABS) shows the Consumer Price Index (CPI) has dropped a record 1.9 per cent in the last quarter, the biggest fall on record. Mr Hockman said: "Since 1949, this was only the third time annual inflation has been negative".

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