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Australia Reports Deflation For The First Time Since 1997 Against The Background Of COVID-19

Australia Reports Deflation For The First Time Since 1997 Against The Background Of COVID-19

Consumer prices in Australia in the second quarter of 2020 decreased by 0.3% in annual terms, the Australian Bureau of Statistics (ABS) reported.

Thus, deflation was recorded in the country for the first time since the third quarter of 1997, due to the negative consequences of the coronavirus pandemic.

Analysts, on average, predicted a 0.4% decline in consumer prices, according to Trading Economics. In the first quarter, consumer prices rose by 2.2%.

The most significant driver of deflation was the decision of the country's authorities to make the work of institutions caring for preschool children free of charge from April 6, as one of the measures in response to the negative effects of the coronavirus pandemic on the economy, the ABS reported.

In quarterly terms, the drop in consumer prices in the second quarter was 1.9%, the highest in the 72-year history of accounting for the indicator, according to ABS data.

Transport prices fell by 7.5% compared to a 2.6% increase in the first quarter, the first decline since the fourth quarter of 2016. Gasoline prices fell by 19%, and education prices fell by 1%. At the same time, prices for food and non-alcoholic beverages increased by 0.5%.