July 16, 2013 2:02pm by David Farrar

Inflation at 14 year low.

There is little in today’s inflation numbers to suggest the Reserve Bank will be forced to change the official cash rate (OCR) earlier than forecast.

Annual inflation has dropped to just 0.7 per cent, the lowest level since 1999, with higher power and housing costs offset by lower petrol and car prices in the June quarter.

The OCR is at 2.5 per cent, a historic low and economists are not expecting to see any rise until early to mid 2014. The central bank releases its next interest rate review on Thursday next week.

Consumer price inflation has been one per cent or below for a year now, and low inflation has allowed the OCR to remain at 2.5 per cent for some time, TD Securities head of Asia Pacific research Annette Beacher said.

Inflation low, interest rates low, economy growing and jobs being created. Not too bad.

The average inflation rate since December 2008 has been 2.2%. If you exclude the GST increase which had compensating tax cuts then it would be 1.7%.

In the previous 18 quarters, it was 3.3%. That means prices increased around 10% every three years.