Today's Consumer Price Index (CPI) shows that inflation remains moderate, with the All Groups CPI increasing by 0.6 per cent in the September quarter 2003 and by 2.6 per cent over the year, within the medium-term inflation target band.
Higher world crude oil prices led to a 3.0 per cent rise in domestic petrol prices in the September quarter, adding 0.1 of a percentage point to the overall increase in the CPI. Housing costs also rose in the September quarter, with ongoing high levels of activity in the construction sector underpinning a 1.7 per cent increase in house purchase prices. Seasonal increases were also recorded for property rates, utilities prices, and rents.
Australian households benefited from price declines across a range of items in the September quarter, including vegetables (down 7.8 per cent), audio visual and computing equipment (down 7.3 per cent), pharmaceuticals (down 3.6 per cent), and motor vehicles (down 0.5 per cent). The removal of the temporary Ansett Levy from 1 July 2003 also contributed to a 1.8 per cent fall in the price of holiday travel and accommodation.
Looking forward, the key medium-term influences on inflation point to continued moderate price pressures in the period ahead. In particular, wages growth remains steady and pressures from other business input costs have been low over recent quarters. In addition, the recent appreciation of the Australian dollar should see lower prices for imported consumables. These conditions are consistent with the Government's forecasts that inflation will remain within the medium-term inflation target band in the coming year.
Today's data confirm that the Australian economy continues to enjoy a healthy combination of solid growth, low unemployment and moderate inflation.