The odds for the Reserve Bank of Australia deciding to cut the official interest rates further last week were high, as Australia’s headline inflation rate drops to its lowest level since the depths of the global financial crisis.

According to data released by the Australian Bureau of Statistics on Wednesday, CPI remained unchanged in the three months to December following a 0.6 per cent rise in the third quarter of 2011. The December quarter reading is the lowest since the final three months of 2008. At an annual rate, the headline CPI figure came in at 3.1 per cent, the lowest in four quarters.

While the market had anticipated a 0.2 per cent increase, falling prices of food and vegetables managed to hold back inflation rates. Economists suggest that the 3.1 per cent inflation rate is only one of the reasons that will pave the way for another interest rate cut from RBA on February 7. They state that the worsening of the economic situation offshore will be highly considered by the bank before they come up with their final decision.