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Consumer Price Index: June quarter 1997

The June quarter CPI outcome is an exceptionally good result.

The All groups CPI fell by 0.2 per cent in the June quarter 1997, following a rise of 0.2 per cent in the March quarter 1997. Through-the-year growth of 0.3 per cent equals the previous low experienced in the December quarter 1992.

The major contributor to the low June quarter result was the 9.6 per cent fall in mortgage interest charges, the largest fall since this category was introduced in March quarter 1987.

The underlying rate of inflation was 0.3 per cent in the June quarter 1997 and 1.7 per cent through-the-year to the June quarter. This through-the-year figure is the lowest recorded since the series started in March 1972.

Ongoing competitive pressures in the economy have contributed to the general improvement in underlying inflation over the past year, although the current very low through-the-year underlying inflation rate has been influenced by the appreciation of the dollar since mid- 1996. The recent depreciation, if sustained could be expected to place some modest upward pressure on underlying inflation in the year ahead.

Low consumer inflation expectations suggest that Australia is now firmly entrenched among the ranks of the world's low inflation economies. Low inflation contributes to a positive environment for business and jobs by increasing certainty, improving international competitiveness, and increasing our attractiveness as a destination for international investment.