The March quarter outcome on inflation of 0.9 per cent was largely influenced by rising

petrol prices, which contributed 0.3 per cent to the outcome. General inflationary

pressures remain in check, well within the 2–3 per cent target range.

Today’s Consumer Price Index shows that the All Groups CPI increased by

0.9 per cent in the March quarter 2000 and 2.8 per cent in the

year to the March quarter.

Over the year to the March quarter 2000, world oil prices have increased by around 120

per cent and petrol prices increased by around 24 per cent. Leaving aside the increase in

petrol prices, the CPI rose by 0.6 per cent in the March quarter to be

2.0 per cent higher than a year ago — at the lower end of the Reserve

Bank’s target band.

In recent weeks, crude oil prices have fallen significantly on world markets and this

has been reflected in lower petrol prices at the pump. If these trends continue, falling

petrol prices will put downward pressure on the CPI over the period ahead.

Project home prices increased by 1.6 per cent in the March quarter and by 8.1 per

cent over the past year, reflecting recent very strong activity in the residential

construction sector.

However, households benefited from a fall in the price of household equipment and

operation, which fell 0.4 per cent in the March quarter to be 0.2 per cent lower than a

year ago. Clothing prices also fell 0.4 per cent in the March quarter to be 1.4 per cent

lower than a year ago, reflecting competitive pressures in this sector. Fresh fruit and

vegetable prices fell 2.5 per cent in the March quarter to be 9.2 per cent lower than

a year ago.

The combination of moderate wage outcomes, a solid trend in productivity growth and

general inflationary pressure remaining in check is evidence of the success of the

Government’s economic reforms. The implementation of The New Tax System will

assist in maintaining Australia’s strong economic performance.

CANBERRA

28 April 2000