A private gauge of inflation has found price increases are now at their lowest level since the global financial crisis, just one day before the Reserve Bank is set to make its monthly decision on interest rates.
According to the latest TD Securities-Melbourne Institute Monthly Inflation Gauge, the annual inflation rate fell to 1.6% in the 12 months to June 2012, which is the slowest pace since 2009.
Prices fell 0.2% during June after being flat in May. As a result, TD Securities Head of Asia-Pacific research Annette Beacher said the RBA is more likely to keep rates on hold.
"We believe the RBA is in a comfortable position to sit tight for at least tomorrow's RBA board meeting," she said.
"We still expect the next move to be down, thanks to the favourable inflation outlook, but we don't see any urgency for a third consecutive cut, given the recent flow of strong data (GDP, employment, exports) have defied poor sentiment."
The current cash rate is 3.5%, after the RBA cut rates earlier this month.
A decline in the price of petrol was a significant contributor, down 8%, although furniture and household product prices also fell as well.
The cost of travel, tools and insurance all rose during June.
Manufacturing contracts in fourth consecutive month
The manufacturing sector contracted for the fourth consecutive month in June, according to the latest figures from the Australian Industry Group-PWC Performance of Manufacturing Index.
The index came to 47.2, under the 50 point level separating expansion from contract.
Eight of the 12 sub sectors also recorded decreases in June.
According to AIG chief executive Innes Willox, the value of the Australian dollar and concerns about the carbon tax have hurt the sector.
Online spending growing slowly
The NAB Online Retail Sales Index posted moderate growth in May - at 187, compared to 169 in April, with spending in dollar terms growing 14% year-on-year in May.
However, this was weaker than the same time last year, with May 2011's year-on-year spending showing 41% growth.
Total online spending for the 12 months ending May 2012 was at $11.3 billion, around 5.2% of traditional bricks and mortar retailing (with the exception of cafes, restaurants and takeaway venues.)
Online retailing continues to perform much better than bricks-and-mortar retailers in general, with the latter recording growth of only 1.6% year-on-year in April.
Shares rise on new European hopes
The sharemarket has opened higher this morning after positive leads late last week on new hopes that Europe can survive through the region's debt crisis.
The benchmark S&P/ASX200 index was up 53 points or 1.3% to 4148.4 at 12.00 AEST, while the Australian dollar slightly fell to $US1.02.
In the United States last week, the Dow Jones Industrial Average rose 277 points or 2.2% to 12,880.
Aristocrat shares fall 11% on profit result
Gaming company Aristocrat has announced expectations its first half net profit will increase by up to 33% - but its shares have taken a fall this morning by 11%.
The company said it hopes to record a net profit of between $30 million and $33 million for the six months to June 30, 2012.
"The company reiterates that it expects continued strong NPAT (net profit after tax) growth over the 12 months to September 30, 2012, and also the calendar year to December 31, 2012, compared with the prior corresponding periods," Aristocrat said in a statement.
Analysts suggest shareholders may have been looking for a better result.