Inflation set to fall in 2009 RBA

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SYDNEY, Sept 8 (AFP) Australia's inflation rate is uncomfortably high but will fall in 2009 as the economy slows amid lower oil prices and a modest slowdown in China, the nation's central banker said today. brReserve Bank of Australia (RBA) governor Glenn Stevens said inflation was likely to peak in the September quarter at about 5.0 per cent-well above the bank's preferred range of 2.0-3.0 per cent. brHe told a parliamentary committee in Melbourne that strong demand and record prices for Australian resources over recent years meant headline inflation figures will remain uncomfortably high for a little while yet. brBut with international oil prices below their mid-year peaks and signs that the pace of food price increases are abating, it is reasonable to expect that CPI (consumer price index) inflation will thereafter start to fall back, he said. brWith demand growth slower, capacity utilisation, while still high, is tending to decline. Trends such as this usually dampen underlying price pressures over time, and those effects should start to become apparent during 2009 and continue into 2010. brStevens said if wage growth did not accelerate and demand growth remained moderate in the near term, the prospects for inflation gradually returning to the bank's target zone were improving.