NO.019

CONSUMER PRICE INDEX – MARCH QUARTER 2002

The All Groups Consumer Price Index (CPI) indicates that inflation in Australia

remains in check. The CPI increased by 0.9 per cent in the March quarter

2002, to be 2.9 per cent higher through the year. This returns inflation

to within the target band and is consistent with the Mid-Year Economic and Fiscal

Outlook (MYEFO) forecast for inflation of 2¾ per cent in 2001-02.

Today’s data confirm that Australia is currently enjoying a very favourable

combination of strong economic growth and moderate inflation.

In the March quarter, price increases occurred across a number of items, with

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

for pharmaceuticals (up around 11 per cent due to the annual resetting

of the safety net in January), holiday travel and accommodation (up 4.7 per

cent, driven by the effect of the Ansett and September 11 insurance levies

and domestic seasonal factors), education (up 4.7 per cent with the start

of the new school year), insurance services (up 2.6 per cent with moderate

rises in key components) and meat and seafood (up 1.8 per cent with overseas

demand continuing to remain strong).

Petrol prices declined slightly by 0.1 per cent in the March quarter,

following the decline of 12.2 per cent in the year to the December

quarter 2001. However, recent rises in crude oil prices on world markets, mainly

due to the conflict in the Middle-East, have resulted in a sizeable increase

in petrol prices which, if sustained, will have a significant impact on the

June quarter CPI.

Australian households benefited from solid price declines across a range of

goods in the March quarter. The price of fruit and vegetables declined by 1.6 per

cent, household appliance and utensil prices declined by 1.8 per cent,

furniture prices declined by 1.4 per cent, audio visual and computing equipment

prices declined by 1.2 per cent, and clothing and footwear prices declined

by 0.4 per cent, with falls observed in many of the clothing and footwear

component items.

The Producer Price Index data released earlier this week also indicated subdued

upstream price pressures. The broadest measure of producer prices, the final

commodities index, increased by 0.2 per cent in the March quarter

and by 2.0 per cent in the year to March quarter.

Australia’s economy has been able to grow strongly despite the recent global

weakness without generating significant inflationary pressures, helping to confirm

its current position as one of the world’s top-performing developed economies.

Canberra

24 April 2002