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Economic Update
Macquarie Private Wealth – 30 April 2010
Australia's headline consumer price index (CPI) rose 0.9% in the March quarter, slightly above market forecasts of 0.8%, according to the Australian Bureau of Statistics (ABS). The ABS data revealed that the annual rate of growth in the CPI was 2.9% to March, compared to a 2.1% annual rise in the December quarter.
According to a statement by the ABS the most significant prices rises this quarter were "for automotive fuel (+4.2%), pharmaceuticals (+13.3%), deposit and loan facilities (+3.4%), vegetables (+10.3%), electricity (+5.9%), house purchase (+1.2%) and hospital and medical services (+2.9%)."
Underlying inflation, a critical indicator for policy makers, rose by 0.8%, lowering the annual rate to 3.05% from 3.35%. While underlying inflation has come down it is still above the Reserve Bank of Australia's (RBA) target inflation band of 2-3%.
The Australian economy has recovered strongly from the financial crisis, posting GDP growth of 0.9 % in the December quarter and 2.7% during the year, with unemployment steady at 5.3%. With the recent economic data signalling that the Australian economy has entered a recovery phase, the expectation is that the RBA will tighten monetary policy further in the coming months.
Consumer Price Index (Quarter on Quarter)
Source: Australian Bureau of Statistics and MPW Research
