Peter Costello

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Consumer Price Index - March Quarter 2003



Today's Consumer Price Index (CPI) shows that the All Groups CPI increased by 1.3 per cent in the March quarter 2003 to be 3.4 per cent higher over the year, largely reflecting the effects of higher world oil prices and the impact of the drought. Abstracting from the increase in petrol and fruit and vegetables prices, the CPI increased by 0.8 per cent in the quarter and by 2.7 per cent over the year.

Petrol prices increased by 8.6 per cent in the March quarter to contribute 0.4 percentage points to the overall increase in the CPI. The increase in petrol prices is likely to be temporary, with prices already having fallen this month.

The drought continues to affect large parts of Australia, contributing to higher food prices, with vegetables prices up 11.7 per cent, meat and seafoods prices up 1.0 per cent and the price of eggs up 13.9 per cent in the March quarter. Price rises were also recorded for pharmaceuticals (up 11.8 per cent), reflecting seasonal influences on the Pharmaceutical Benefits Scheme's safety net.

Price falls occurred for a number of items including clothing and footwear (down 1.4 per cent), audio, visual and computing equipment (down 4.4 per cent), and motor vehicles (down 0.5 per cent).

Looking forward, the medium-term influences on inflation point to more moderate outcomes in the period ahead. In particular, wages growth remains steady, productivity continues to grow solidly and most measures of input price inflation have been low over recent quarters. These conditions are consistent with the Government's forecasts that inflation will fall to within the medium-term inflation target in coming quarters.

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.

23 April 2003

Contact: David Wawn    Office of the Hon Nick Minchin
(02) 6277 7400

David Alexander    Office of the Treasurer
(02) 6277 7340

23 Apr 2003

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