Inflation falls but economists say don't expect a rate cut yet | The Business | ABC News

The annual rate of headline inflation has fallen to the lowest level in three years. It came in at 2.7 per cent in August, down from 3.5 per cent in July. That huge slowdown in the pace of headline inflation was expected by economists. They say it partly reflects the recent introduction of Commonwealth and state government electricity rebates, which have helped to drive down measured inflation in a technical way. An important measure of underlying inflation - called "trimmed mean" or core inflation - fell to 3.4 per cent in August, which is higher than the Reserve Bank's target of 2 - 3 per cent. Diana Mousina, AMP deputy chief economist, says she expects core inflation to be a bit lower at the end of this year than the RBA is currently forecasting. She expects the Reserve Bank to start cutting interest rates in February.
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