Peter Costello

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Consumer Price Index - June Quarter 2003

NO.060

CONSUMER PRICE INDEX – JUNE QUARTER 2003

Today’s Consumer Price Index (CPI) shows that the All Groups CPI was unchanged in the June quarter 2003 to be 2.7 per cent higher over the year, within the medium-term inflation target band.

The June quarter outcome was the lowest since the March quarter 1999 and reflected a sharp fall in petrol prices and lower fruit and vegetables prices, partly reversing earlier rises. Abstracting from the influence of these volatile items, the CPI rose by 0.6 per cent in the June quarter, to be 2.7 per cent higher over the year. This moderate rate of underlying inflation is consistent with recent solid growth in the Australian economy, coupled with subdued growth in wages and other business input costs.

Australian households benefited from a fall in petrol prices of 9.6 per cent in the June quarter that subtracted 0.4 of a percentage point from the overall change in the CPI. The sharp fall in petrol prices reflects both lower world crude oil prices and the recent appreciation of the Australian dollar. Fruit and vegetables prices fell by 5.2 per cent in the June quarter, consistent with the usual seasonal pattern. However, food prices remain 4.4 per cent higher over the year, with the drought continuing to affect large parts of Australia.

Price increases were recorded for house purchases (up 2.0 per cent, driven by increased building input costs), hospital and medical services (up 5.2 per cent, due in part to an increase in private health insurance premiums from 1 April), furniture (up 2.1 per cent, reflecting both the end of new year sales and increased material costs) and overseas holiday travel and accommodation (up 1.6 per cent, consistent with the usual seasonal pattern).

Looking forward, the key medium-term influences on inflation point to continued moderate outcomes in the period ahead. Pressures on business margins from wages and other business input costs remain in check, while the Australian economy continues to grow solidly. In addition, the recent appreciation of the Australian dollar should see lower prices for imported consumables. These conditions are consistent with the Government’s forecasts that inflation will remain within the medium-term inflation target in the coming year.

Today’s data confirm that the Australian economy continues to enjoy a healthy combination of solid growth and moderate inflation, despite a difficult global environment and the most extensive drought in Australian meteorological records.

MELBOURNE
23 July 2003

Contact: David Alexander
03 9650 0244

 

 

23 Jul 2003

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