NO.117

CONSUMER PRICE INDEX – SEPTEMBER QUARTER 2006

Today’s All Groups Consumer Price Index (CPI) rose by 0.9 per cent in the September quarter 2006, to be 3.9 per cent higher than a year ago. Inflation continues to reflect rising fruit prices, which contributed around one‑third of the quarterly increase in the CPI. Excluding price increases in fuel and fruit, the CPI was 2.7 per cent higher through the year.

The food component of the CPI increased by 2.3 per cent in the September quarter and contributed around 0.4 of a percentage point to quarterly inflation. This was largely driven by a 20.5 per cent increase in fruit prices, which reflected a 45 per cent rise in the average price of bananas in the September quarter.

Housing costs rose by 1.2 per cent in the September quarter in line with seasonal increases in utilities prices and property rates and charges, and contributed around 0.2 of a percentage point to quarterly inflation. Price increases were also recorded for household contents and services (up 1.3 per cent in the quarter), holiday travel and accommodation (up 1.2 per cent) and motor vehicles (up 0.8 per cent). Price rises in part, reflected the impact of earlier rises in world oil prices, which have fed through to packaging and distribution and other costs.

Australian households benefited from price falls across a range of items in the September quarter. Fuel prices were lower (down 1.1 per cent in the quarter) on the back of recent falls in world oil prices and will be lower again in the December quarter if fuel prices remain around current levels. Price falls were also recorded in wine (down 1.4 per cent), major household appliances (down 1.9 per cent) and audio visual and computing equipment (down 1.5 per cent). Pharmaceutical prices also fell due to the effect of the Pharmaceutical Benefits Scheme safety net (down 5.0 per cent).

In the period ahead, the medium‑term influences on inflation point to more moderate outcomes, as temporary shocks such as Tropical Cyclone Larry are gradually unwound. However, the effects of drought on food prices create some uncertainty around the inflation outlook.

The Government’s economic reforms have created a dynamic and flexible economy, more able to respond to significant price shocks. The continuation of the Government’s sound economic management should ensure that households continue to benefit from a higher standard of living that comes with relatively low levels of inflation, strong and sustainable wage growth, record labour force participation and the lowest unemployment rate in 30 years.

MELBOURNE

25 October 2006

Contact:  

Renae Stoikos

03 9650 0244