Australia’s cost of living has fallen sharply in the September quarter after the Federal Government’s repeal of the carbon tax.

The annual inflation rate now sits at 2.3, down from 3 per cent which is right at the top of the Reserve Bank’s comfort zone.

The price of goods and services rose by 0.5 per cent in the September quarter.

The Australian Bureau of Statistics said the most significant price falls during the quarter were for electricity (down 5.1 per cent) and automotive fuel (down 2.5 per cent).

However, fruit prices jumped by 14.7 per cent.

Economists surveyed by Bloomberg had forecast the September quarter consumer price index (CPI) to rise by 0.4 per cent, with the annual rate to fall to 2.3 per cent.  The June CPI was 0.5 per cent.

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The fall is good news for borrowers who will be hoping the Reserve Bank will continue its run of record low interest rates.

Economists said the carbon tax repeal, falling commodity price and lower fuel prices kept the rate down, while housing, food and health offset the falls.

Underlying measures of inflation, which smooth out volatile swings in prices, also rose by 0.5 per cent in the quarter to be 2.55 per cent higher on the year.

– with agencies