The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
Picture of Wayne Swan

Wayne Swan

Deputy Prime Minister and Treasurer

3 December 2007 - 27 June 2013

23 July 2008



Today's inflation figures show that Australia's substantial inflation problem has been made worse by skyrocketing global oil prices and the global financial crisis which are buffeting families already doing it tough.

Australia is facing the most difficult global economic conditions in a generation and inflation is a major part of that challenge.

The CPI rose by 1.5 per cent in the June quarter, driving the annual rate higher to 4.5 per cent. Excluding the impact of the GST, inflation is running at the highest rate since the December quarter 1995.

RBA measures of underlying inflation indicate that price pressures remain widespread. The trimmed mean inflation measure was 1.2 per cent in the June quarter to be 4.3 per cent higher over the year and weighted median inflation was also 1.0 per cent higher in the quarter to be 4.5 per cent higher over the year. Both of the RBA measures remain at their highest level in more than 16 years.

Rising global oil prices, flowing through to domestic fuel prices, contributed significantly to the quarterly CPI outcome. Automotive fuel prices rose by 8.7 per cent in the quarter, and are up 18.4 per cent through the year.

The price of deposit and loan facilities also rose strongly in the quarter, up by 9.5 per cent to be 16.2 per cent higher over the year. The rise has been driven by tighter credit conditions arising from the global financial crisis, as well as an ABS correction for under-estimation in previous quarters.

Housing costs also contributed to inflation. Continued low vacancy rates and strong demand for housing have driven rents higher across all the capital cities. Rents increased by 2.2 per cent in the quarter, the largest quarterly rise since 1989, to be 7.7 per cent higher through the year.

Today's inflation figures are further confirmation of the need to address the build up in inflationary pressures of the last few years, now made much worse by global factors.

The Rudd Government delivered a responsible Budget to fight inflation and invest in the future. The Government has brought spending back under control and built a strong surplus to finance future investment and strengthen our economy against the difficult global challenges now unfolding.

23 July 2008