(Image: AAP/Regi Varghese)

Reserve Bank governor Philip Lowe has been slashing interest rates to never-before-seen levels, trying his darnedest to generate a little bit of inflation. He hasn’t got much. Consumer price inflation in the past 12 months was just 0.9%.

He takes credit for what little inflation there is, but if he went outside his Martin Place office and looked at the people huddled around the side of the office buildings, he might find those who should really take the credit: smokers.

Whenever official inflation numbers come out, most of the lift in prices is found in tobacco. As the next graph shows, when you take tobacco out, inflation looks even weaker.