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Annual inflation lowest in 17 years


Annual inflation has fallen to its lowest level in 17 years, opening the door for a potential interest rate cut when the Reserve Bank board meets next week.

The consumer price index rose just 0.4 per cent in the June quarter, dragging the annual rate down to just one per cent and well below the central bank's two to three per cent inflation target band.

Underlying measures of inflation - which smooth out volatile price swings - were equally benign at an average 0.45 per cent in the quarter for 1.5 per cent over the year, but were a little stronger than economists had expected and suggest a rate cut is not definite.