The release of the Consumer Price Index (CPI) today shows that inflationary pressures in Australia remain in check. The All Groups CPI increased by 0.8 per cent in the June quarter 2001, well below the increase of 1.1 per cent in the March quarter.
The increase in the CPI through the year to the June quarter 2001 of 6.0 per cent (in line with the Budget forecast) includes the one-off impact from the introduction of The New Tax System (which is estimated to have added around 2 per cent to the CPI over that period), along with the impact of generally higher world oil prices on domestic petrol prices and the effect of seasonal influences on fruit and vegetable prices. Looking through these factors, inflation over the past year remained well within the 2-3 per cent target band.
Price increases for some meat and seafood items in the June quarter largely reflects very strong world demand for Australian produce, partly attributable to international concerns over foot and mouth disease in other parts of the world.
Petrol prices in the June quarter also rose modestly, by 3.2 per cent, following a large decline in the March quarter. However, significant falls in petrol prices in the month of June which continued into July will be reflected in the CPI outcome for the September quarter if they are sustained.
Households benefited from price falls for a range of items in the June quarter. Fresh fruit and vegetable prices declined as supply conditions returned to more normal levels following adverse seasonal conditions in northern NSW and southern Queensland. Prices also fell for audio, visual and computing equipment, as well as domestic holidays and travel. A decline in house purchase prices in the quarter partly reflects the beneficial impact of the enhancement of the Governments First Home Owners Scheme.
The continued low inflation environment and modest wage pressures will play an important role in keeping interest rates low. In conjunction with recent developments such as the enhancement of the First Home Owners Scheme, the abolition of Financial Institutions Duty and stamp duty on marketable securities, and the bring forward of the input tax credit scheme for motor vehicles, the Government is helping to create an environment that is conducive to solid economic and employment growth and the continued improvement of living standards for all Australians.