The release of the Consumer Price Index (CPI) today shows that inflationary pressures in Australia remain in check.
The All Groups CPI increased by 0.7 per cent in the June quarter 2002, below the increase of 0.9 per cent in the March quarter. Through the year to the June quarter 2002, the CPI increased by 2.8 per cent, in line with the Budget forecast for 2001-02.
In the June quarter, price increases occurred across a number of items. These include petrol (up 7.5 per cent, reflecting a rise in world crude oil prices of around 20 per cent in US dollar terms over the June quarter), hospital and medical services (up around 4.9 per cent, due in part to the increase in private health insurance premiums from 1 April), overseas holiday travel and accommodation (up 4.2 per cent, consistent with the usual seasonal pattern), house purchases (up 1.0 per cent, driven by increased building costs), and furniture (up 2.1 per cent, partly reflecting less discounting at the retail level).
At the same time, Australian households benefited from solid price declines across a range of items in the June quarter. For example, price falls were recorded for fruit and vegetables (down 5.8 per cent), motor vehicles (down 0.9 per cent) and domestic holiday travel and accommodation (down 1.5 per cent). In addition, meat and seafood prices steadied in the June quarter, following sharp rises in the last year.
The outlook is for inflation to remain subdued, with the key medium term influences on inflation pointing to moderate outcomes. In particular, wages growth remains steady, productivity continues to grow strongly and most measures of upstream price movements have been low over recent quarters. Very competitive Australian markets will also help to produce subdued inflation outcomes.
Today's data release provides further evidence that Australia remains one of the world's best performing economies. The Australian economy continues to enjoy solid growth and modest inflation.