26 Jan 2011

Australia inflation rate lower than expected

6:54 am on 26 January 2011

The latest inflation figures in Australia have defied most economist's predictions, showing the smallest quarterly rise in nearly two years.

The Consumer Price Index (CPI) increased by 0.4% in the three months to December, taking the annual inflation rate to 2.7%.

The Reserve Bank focuses on the underlying inflation rate, which stood at 2.2% on an annual basis, and is within the RBA's inflation band of between 2% and 3%.

The market was expecting a quarterly increase of 0.7%, which would have taken the annual inflation rate to 3%, the ABC reports.