NO.002

Consumer Price Index – December Quarter 2001

The All Groups CPI increased by 0.9 per cent in the December quarter

2001, and 3.1 per cent through the year to the end of calendar 2001.

The 0.9 per cent increase in the December quarter follows an increase of 0.3

per cent in the September quarter and the outcomes so far in the financial year

are consistent with Budget forecasts. The large increase in fruit and vegetable

prices in the December quarter should be temporary and a return to more favourable

seasonal conditions should result in fruit and vegetable prices easing over

coming quarters.

In the December quarter, price increases occurred across the majority of items,

with seasonal and one-off factors playing an important role. Price rises were

recorded for fresh fruit and vegetables (up 10.2 per cent, as a result

of adverse seasonal conditions and some supply shortages), domestic holiday

travel and accommodation (up 7.7 per cent, driven by responses to the demise

of Ansett as well as seasonal increases), meat prices (beef and veal prices

rose 5.5 per cent boosted by continued world demand for Australian

produce), clothing and footwear (up 1.4 per cent driven by new season

fashions) and house purchase prices (up 1.1 per cent on strong demand

and record low interest rates).

Petrol prices again declined significantly in the December quarter, by around

3.7 per cent, on the back of falls in global oil prices. This follows the

decline in petrol prices of 8.3 per cent in the September quarter.

Over the past year, petrol prices have declined by 12.2 per cent.

In addition to petrol, price declines were recorded across a range of goods

and services in the December quarter including pharmaceuticals (down 4.8 per cent),

gas and other household fuels (down 4.2 per cent) , and audio visual

and computing equipment (down 1.6 per cent ).

Today’s outcome does not alter the outlook for inflation to be within the target

band in 2001-02, and nor does it change the fact that Australia’s economy has

continued to weather the current global weakness very well, and is expected

to be one of the world’s top-performing economies in 2002.

Canberra

23 January 2002