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Wayne Swan

Deputy Prime Minister and Treasurer

3 December 2007 - 27 June 2013

28 April 2010


Consumer Price Index – March Quarter 2010

Today's Consumer Price Index (CPI) result shows that headline inflation was 0.9 per cent in the March quarter 2010, and 2.9 per cent over the year. This is up from 2.1 per cent over the year to the December quarter 2009. The increase in annual inflation reflects the impact of a range of dampening factors that occurred a year ago coming to an end – including falls in the prices of automotive fuel, holiday travel and accommodation, and financial and insurance services.

Measures of underlying inflation continued to ease gradually through the year, reflecting the lagged impact of easing demand pressures during the downturn. Underlying inflation continued to moderate down to 3.1 per cent through the year to the March quarter 2010 compared with 3.3 per cent through the year to the December quarter 2009. Underlying inflation was 0.8 per cent in the quarter.

The main contributors to the headline inflation result in the March quarter were rises in housing and financial and insurance services prices. The rise in headline inflation was also supported by seasonal price increases in health and education groups.

Housing contributed 0.3 of a percentage point to inflation, with house purchase prices impacted by the winding down of the First Home Owners Boost. Financial and insurance services contributed 0.2 of a percentage point, reflecting a continued rebound in the deposit and loans sub-component of this group following the downturn. Health prices contributed 0.2 of a percentage point to inflation, reflecting the seasonal price increases in pharmaceuticals under the Pharmaceutical Benefits Scheme. Education prices contributed 0.2 of a percentage point to inflation, reflecting the seasonal increases in national education prices that occur at the beginning of each calendar year.

Inflation moderated substantially over the course of 2009, with the global recession resulting in a substantial reduction in aggregate demand pressures. The outlook is for inflation to remain moderate in the near-term.

The Government remains focused on its task of building the economy's capacity so we can have sustainable growth with low inflation into the future.

28 April 2010