Today's inflation figure is a stark reminder of the price pressures Australian families face.
The high inflation revealed today in the March quarter CPI underscores the need for a responsible Budget to get spending back under control and tackle inflation and interest rate pressu res.
The CPI rose by 1.3 per cent in the quarter, taking the annual rate to 4.2 per cent.
The RBA measures of underlying inflation rose further in the March quarter, with the trimmed mean up 1.2 per cent in the quarter to be 4.1 per cent higher over the year and the weighted median up 1.3 per cent higher in the quarter to be 4.4 per cent higher over the year. Both of the RBA measures are at highs that have not been seen for 16 years and indicate that inflationary pressure is broad-based across the economy.
Housing, food and fuel costs were the largest contributors to the quarterly result. Continued low vacancy rates and strong demand for housing have driven rents higher across all the capital cities. Rents increased by 2.0 per cent in the quarter to be 7.1 per cent higher through the year. House purchase prices also increased strongly coupled with strong growth in utility prices. Overall food prices rose by 2.1 per cent to be 5.7 per cent higher through the year, with rises across all categories except fruit. Automotive fuel prices rose by 5.4 per cent in the quarter due to strong growth in world oil prices.
Further rises in the terms of trade, and ongoing high global energy and food prices, will continue to add to price pressures in a capacity constrained economy. That's why we must continue to act to tackle the inflation challenge.
The Rudd Government has already outlined a comprehensive fivepoint plan to fight inflation.
This plan, central to the responsible Budget we will hand down in three weeks, is the best contribution the Government can make to the fight against inflation.
That responsible Budget will fight domestic inflation and help the economy withstand difficult international conditions.