Australian inflation continues its slow fall as the global downturn, the fall in oil and commodity prices, and more importantly the local slowdown, reduces price pressures in the Australian economy.

On top of this, the rise in the value of the Australian dollar in the past quarter also played a big part in curbing import price rises, even as it trimmed export income.

The latest figures, and those for preceding quarters, show the price pressures working their way through the three stages of production: preliminary, intermediate and final, with the cost increases more apparent in the final stage of the June quarter.

The Reserve Bank has been discussing and highlighting the slow dissipation of these pressures in its minutes and post-meeting statements for the past three or four board meetings. We will get more statements when the minutes for the July board meeting are released tomorrow.

And we will see the easing in Wednesday’s headline Consumer Price Index figures, but the core inflation figures will reveal that those pressures still haven’t been fully ejected from the system.

But they are easing, with significant falls in price pressures seen in the March quarter continuing into the June quarter, despite a rise in oil prices in the latest period.

Today’s Producer Price Indexes for the June quarter and 2009 financial year, released by the Australian Bureau of Statistics, showed that the PPI continued the easing seen in the March quarter from the peak in the December quarter.

The PPI for the final stage of production fell 0.8 per cent in the June quarter, (a fall of 0.4 per cent in the March quarter and up 1.3 per cent in the December quarter) for an annual rise of 2.1 per cent.

That was better than the forecast from economists who had expected the June quarter PPI to fall 0.2 per cent for an annual rise of 2.9 per cent.

The annual rate was lower than the 4 per cent rise in the March quarter and up a sharp 6.4 per cent in the December quarter.

In the June quarter, at the intermediate stage, the PPI fell 1.9 per cent (down 3.2 per cent in the March quarter and up in the December quarter). The annual rate fell 0.8 per cent after being up 3.9 per cent in the March quarter and a massive 9.5 per cent in the year to December (calendar 2008).

At the preliminary stage the it fell 2.7 per cent in the June quarter, to be down 1.9 per cent in the year to June, against an annual rise of 4.3 per cent in March and a rather large 11.9 per cent in the year to December.

The latest PPI figures came after the import and export indexes for the June quarter and the financial year were released on Friday.

Export prices fell 21 per cent in the June quarter, after falling only 5 per cent in the previous quarter, thanks to those already-reported sharp fall in iron ore and coal prices, plus the 12 per cent rise in the value of the Australian dollar in the quarter.

Import prices also fell sharply in the quarter, losing a record 6.4 per cent, mainly as a result of the stronger dollar. The ABS said the fall in this index was the biggest since import price records were first collected in the early 1980s.

Through the year to the June quarter 2009, the Import Price Index rose 5.9 per cent, while the Export Price Index fell by 0.2 per cent.