World Economic outlook - australian CPI Forecast 2012 : Consumer prices have missed expectations in the fourth quarter, adding to speculation of an interest rate cut, according to data from the Australian Bureau of Statistics.
The ABS consumer price index showed no change in the headline rate during the December quarter, compared to a 0.6 per cent rise in the previous quarter. Analysts were expecting a rise of 0.2 per cent.
The result takes the annual rate to 3.1 per cent, down from 3.5 per cent in the September quarter. The latest official forecast from the Reserve Bank of Australia (RBA), in November, was for annual inflation of 3.25 per cent through 2011.
Commsec economist Savanth Sebastian said the weaker-than-expected figures added to the case for the RBA to cut the official interest rate again in February.
The RBA cut the rate by 25 percentage points in November and again, by the same amount, in December.
"I think it is a done deal now that the Reserve Bank will cut rates," he said.
"The Australian economy has been quite sluggish, global growth forecasts have been cut and I think the Reserve Bank will take out a little bit more insurance in these volatile times."
The data showed trimmed mean CPI rose 0.6 per cent in the December quarter, for an annual growth rate of 2.6 per cent. The weighted median CPI rose 0.5 per cent, for an annual rise of 2.6 per cent.
The market had expected the underlying measures to show a 2.4 per cent annual rise, meaning the core inflation measures came in above expectations.
Seasonally adjusted CPI rose 0.2 per cent in the December quarter, and was up three per cent in the 12 months to December.
The ABS calculates the trimmed mean and weighted median measures on behalf of the RBA, which uses them to gauge the underlying trend in inflation.
Unlike the headline CPI, the RBA's underlying measures are subject to revision due to the seasonal adjustment of some of their components. The RBA adjusts the cash rate to keep the inflation rate in a target band of two to three per cent on average over the medium term.
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