NO.046

The June quarter 1999 CPI confirms that inflation in Australia remains well in check,

in an environment of strong economic growth.

The All Groups CPI rose 0.4 per cent in the June quarter 1999 and

1.1 per cent in the year to the June quarter. The Government’s

30 per cent rebate on private health insurance, which took effect in the March

quarter 1999, contributed to the low through the year result.

The underlying inflation rate was 0.4 per cent in the June quarter 1999

and 1.7 per cent in the year to the June quarter. Publication of this series

will be discontinued from the September quarter 1999 (a year after the introduction

of the 13^th Series of the CPI).

Australia’s inflation rate remains significantly below the OECD average, enhancing

Australia’s reputation as a high growth, low inflation economy.

Fresh fruit and vegetable prices fell 3.5 per cent in the June quarter,

reversing some of the increases recorded in earlier quarters in response to the

unfavourable seasonal conditions of late last year. Fresh fruit prices fell

0.8 per cent in the June quarter and fresh vegetable prices fell

6.2 per cent. In total, food prices rose 0.2 per cent in the June

quarter.

Petrol prices rose 5.2 per cent in the June quarter, in response to higher

world oil prices. While transportation prices in total rose 1.4 per cent, motor

vehicles prices fell 0.4 per cent. Motor vehicle prices have now fallen for five

consecutive quarters and are at their lowest level since the June quarter 1992.

The retail price of imported goods fell 0.1 per cent in the June quarter and 1.9 per

cent in the year to the June quarter, reflecting falling import prices across the docks in

recent quarters and ongoing strong domestic competition. The price of overseas holiday

travel and accommodation increased by 7.3 per cent in the June quarter, largely

reflecting seasonal influences. In contrast, the price of domestic holiday travel and

accommodation fell by 6.1 per cent.

The success of labour and product market reforms are evident in Australia’s

continued low inflation outcomes. Price pressures remain subdued, with strong growth in

productivity, moderate wage outcomes and continuing healthy competition. The Government

believes that these reforms will provide the basis for continued economic growth and low

inflation into the next century.

CANBERRA

28 July 1999