The Consumer Price Index (CPI) rose 1.6 per cent in the March quarter 2011, up from 0.4 per cent in the December quarter 2010, showing the impact of the summer's floods and Cyclone Yasi. In through‑the‑year terms, headline inflation was 3.3 per cent in the March quarter, up from 2.7 per cent in the previous quarter.
The strong headline result was driven predominantly by a major spike in fruit and vegetable prices as a result of the natural disasters that destroyed crops in large areas of Eastern Australia's food bowl. Fruit and vegetable prices rose 15.3 per cent, contributing around 0.4 percentage points to growth in the CPI.
Automotive fuel prices rose 8.8 per cent, contributing around 0.3 percentage points to quarterly inflation. The rise reflected the recent strength in world oil prices, partly resulting from the unrest in the Middle East and North Africa, which is feeding into higher prices at the petrol pump.
Housing prices rose by 1.3 per cent, driven by increases in the prices of utilities and rents, while the price of deposit and loan facilities also rose solidly.
These increases were partly offset by a fall in household contents and services prices, which subtracted around 0.1 of a percentage point from CPI growth in the March quarter.
Underlying inflation was 0.9 per cent in the quarter, up from 0.4 per cent in December. In through‑the‑year terms, underlying inflation in the March quarter was 2.3 per cent through the year, up slightly from the December quarter. This remains around the lowest rate of underlying inflation in 10 years.
We understand higher prices are an unwelcome hit to family budgets, particularly at a time when many Australians are still picking up the pieces from natural disasters that have ravaged communities across the country.
The Government will continue its task of building the economy's capacity so we can have sustainable growth with low inflation into the future. This includes cutting the company tax rate, making vital investments in capacity-building infrastructure, and major investments in training and education.
27 April 2011