July 8, 2020 / 3:04 AM / a month ago

Australia's shift to free child care to take chunk out of CPI inflation - ABS

SYDNEY (Reuters) - Australian consumer price inflation will be reduced sharply in the June quarter due to a government decision to make child care free as part of a stimulus package for the coronavirus crisis, the country’s statistician said on Wednesday.

The Australian Bureau of Statistics said free child care would subtract 1.1 percentage point from the headline consumer price index (CPI).

Support packages for rents and permanent or temporary re-negotiations of rent between landlords and tenants would also be treated as a fall in prices, the ABS said.

Analysts expect these changes, combined with a sharp drop in petrol prices, could see the largest ever fall in CPI in the second quarter and even take annual inflation negative.

Reporting by Wayne Cole; Editing by Jacqueline Wong

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