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Consumer Price Index – March Quarter 1998

The March quarter CPI outcome continues the exceptionally good inflation performance of the past year.

The underlying rate of inflation was 0.5 per cent in the March quarter 1998 and 1.5 per cent through the year to the March quarter. This through-the-year figure is only very marginally above last quarter’s record low of 1.4 per cent. The underlying rate of inflation has been below 2 per cent for the last seven consecutive quarters and is less than half its March 1996 quarter rate of 3.3 per cent.

The All groups CPI rose by 0.3 per cent in the March quarter 1998, the same as in the previous quarter. Through the year to the March quarter 1998, the All Groups CPI fell by 0.2 per cent.

The major contribution to the March quarter result came from lower automotive fuel prices, which fell by 4.3 per cent in the quarter. Motor vehicle prices rose by 0.8 per cent in the March quarter after falling in recent quarters. Automotive fuel and motor vehicle prices fell in through-the-year terms –

the first time both have fallen since the December quarter 1976.

Mortgage interest charges fell slightly in the March quarter –

their seventh consecutive fall –

and are now 33 per cent lower than two years ago.

Prices of imported items as a group rose by just 0.2 per cent in the quarter. This movement in retail prices of imported goods contrasts with significant increases in the price of imported goods at the dock reflecting the impact of exchange rate movements. This relatively minor increase in retail prices of such goods demonstrates the extent of ongoing competitive pressures in the Australian economy.

Low inflation is a key to ensuring that the economy can grow strongly on a sustainable basis. These results show that Australia is firmly entrenched among the ranks of the world’s low inflation economies.

CANBERRA

29 April 1998