NO.040

CONSUMER PRICE INDEX – JUNE QUARTER 2002

The release of the Consumer Price Index (CPI) today shows that inflationary

pressures in Australia remain in check.

The All Groups CPI increased by 0.7 per cent in the June quarter 2002, below

the increase of 0.9 per cent in the March quarter. Through the year to

the June quarter 2002, the CPI increased by 2.8 per cent, in line with the Budget

forecast for 2001-02.

In the June quarter, price increases occurred across a number of items. These

include petrol (up 7.5 per cent, reflecting a rise in world crude oil prices

of around 20 per cent in US dollar terms over the June quarter), hospital

and medical services (up around 4.9 per cent, due in part to the increase

in private health insurance premiums from 1 April), overseas holiday travel

and accommodation (up 4.2 per cent, consistent with the usual seasonal

pattern), house purchases (up 1.0 per cent, driven by increased building

costs), and furniture (up 2.1 per cent, partly reflecting less discounting

at the retail level).

At the same time, Australian households benefited from solid price declines

across a range of items in the June quarter. For example, price falls were recorded

for fruit and vegetables (down 5.8 per cent), motor vehicles (down

0.9 per cent) and domestic holiday travel and accommodation (down

1.5 per cent). In addition, meat and seafood prices steadied in the June

quarter, following sharp rises in the last year.

The outlook is for inflation to remain subdued, with the key medium term influences

on inflation pointing to moderate outcomes. In particular, wages growth remains

steady, productivity continues to grow strongly and most measures of upstream

price movements have been low over recent quarters. Very competitive Australian

markets will also help to produce subdued inflation outcomes.

Today’s data release provides further evidence that Australia remains one of

the world’s best performing economies. The Australian economy continues to enjoy

solid growth and modest inflation.

Melbourne

24 July 2002