The Federal Government expects cost of living pressures will remain subdued in the short term due to fallout from the global financial crisis.
Treasurer Wayne Swan says figures released today by the Australian Bureau of Statistics showed prices pressures had eased, taking the headline inflation rate to its lowest level in 10 years.
Australia's headline consumer price index (CPI) rose 0.5 per cent in the June quarter, for an annual rate of 1.5 per cent, according to the ABS.
The result represents an easing in annual inflation after the CPI rose 0.1 per cent in the March quarter for an annual rate of 2.5 per cent.
Mr Swan said inflation was expected to remain subdued over the near term as the effects of the global recession continue to impact on the domestic economy.
He said there was a broad-based easing of inflationary pressures in the economy.
''In this particular quarter food prices, particularly fruit and veg, are down substantially and of course as we know petrol prices have gone up somewhat in this quarter, but are still substantially below their peak,'' he said.
''That peak of course is what was driving partly substantial inflationary pressures that we were dealing with last year.''
Mr Swan said there was a moderation of prices pressures across the board, reflecting the impact of the global recession.
Mr Swan said underlying inflation - which excludes more volatile components of the CPI - continued to slow too.
Underlying inflation eased to 0.8 per cent in the June quarter from 1.1 per cent three months earlier.
Over the year to June, it fell to 3.9 per cent, down from an annualised rate of 4.2 per cent in the March quarter.
Mr Swan noted that inflation had moderated significantly since late 2008 as the global recession weighed on demand.
He added that stimulus efforts introduced by the Federal Government were continuing to play an essential role in supporting the economy and to protect families from the ''savagery of this global recession''.
The treasurer said skilled vacancies data, also released on Wednesday, showed Australia was still dealing with the effects of the global recession.
''Even if it is the case that the worst of the global disruption is over, this country is going to live with the consequences of that disruption for some time to come.''
He said it was too early to declare the worst of the global financial crisis over.
''We think it is important to make sure that we continue to support the Australian economy given the fact that we will still be living with the fallout from this global recession even if the worst is past,'' he said.
Mr Swan rejected the need for revised budget and economic forecasts ahead of the Mid-Year Economic and Fiscal Outlook later this year, saying it would be irresponsible to do so.
''We won't be providing some sort of monthly revision of our figures,'' he said, adding the government was ''encouraged'' by recent economic data.
''Things are going better than we anticipated, but there are still big challenges out there and we have to meet them.''
There had been good outcomes from the Government's economic stimulus packages which were reflected in data from the past month or so.
''All those things are very encouraging ... but we're still got a way to go.''
AAP
