Bob Carr, Labor LeadershipJuly 25, 2000
Australian Paralympic Team 2000 Launch: Paralympics, Entry Fees Payment by Federal GovernmentJuly 27, 2000
Consumer Price Index – June Quarter 2000
Todays Consumer Price Index shows the All Groups CPI increased by
0.8 per cent in the June quarter 2000 to be 3.2 per cent higher than a year ago,
largely reflecting rising petrol prices. The outcome is in line with budget forecasts.
World oil prices have increased by more than 60 per cent in US dollar terms over the
year to the June quarter, leading to a sharp rise in petrol prices in most countries. In
Australia, the increase in petrol prices was around 22 per cent over the past year.
Leaving aside petrol prices, the CPI rose by 2.4 per cent over the past year, well within
the Reserve Banks medium-term inflation target band. World crude oil prices have
stabilised or declined a little over recent weeks. If this trend continues, petrol prices
are likely to have a moderating influence on the CPI over the period ahead.
The prices of several items are likely to have been affected to some extent over recent
quarters ahead of the introduction of The New Tax System. For example, house
purchase prices have risen in response to very strong activity in the housing sector ahead
of the tax changes, some insurance prices (as measured in the CPI) have included a GST
component, while motor vehicle prices and some audio, visual and computing equipment
prices have fallen.
Despite the modest overall increase in consumer prices in the June quarter, households
benefited from a fall in the price of a range of items. The cost of utilities fell 0.4 per
cent in the June quarter. Fresh fruit prices fell by 4 per cent in the June quarter
to be 17 per cent lower than a year ago. The price of electronic equipment fell
1.2 per cent in the quarter and 15 per cent through the year. Domestic holiday travel and
accommodation prices fell by 4.3 per cent in the June quarter.
Looking ahead, ongoing inflation is expected to remain low, in line with the
medium-term target band of 23 per cent, underpinned by moderate wage outcomes and
solid productivity gains. Much of the effect on prices of the changed indirect tax
arrangements under The New Tax System will be recorded in the September quarter.
However, these price effects will be once-off and will not disturb the low trend inflation
rate in Australia. Households have already been generously compensated for these once-off
price increases through income tax cuts and increases in pensions and other welfare
payments from 1 July.
The introduction of The New Tax System has proceeded smoothly. Inflationary
expectations fell significantly following the introduction of the GST and consumer
sentiment improved dramatically. The success of the Governments economic reforms
will continue to support Australias impressive economic performance over the period
26 July 2000