Consumer prices edge up 0.2% in June quarter, less than expected

Australia’s consumer price index, the key measure of inflation, rose 0.2 per cent in the June quarter 2017, missing economists’ expectations of a 0.4 per cent rise and triggering a slide in the Aussie dollar.

This follows a rise of 0.5 per cent in the March quarter 2017, according to the Australian Bureau of Statistics (ABS) figures revealed on Wednesday.

What if inflation rises and wages don’t?

Australia has more economic challenges than just Sydney and Melbourne housing prices, for example wages growth is stubbornly low and so is inflation. Michael Pascoe comments.

The biggest price rises came from medical and hospital services (up 4.1 per cent), rising dwelling prices and higher costs for tobacco, the bureau said. The price gains were partially offset by falls in domestic travel costs (minus 3.2 per cent) and petrol prices (minus 2.5 per cent). 

Consumer prices rose 1.9 per cent through the year to June quarter 2017, having increased to 2.1 per cent in the March quarter 2017.

Underlying inflation, which strips out volatile price movements, was 1.8 per cent over the year, after a quarterly rise of 0.5 per cent.

The Australian dollar fell as low as US79.01 cents after the release of the figures, down from US79.37 cents at 1129 AEST, immediately before the inflation data was released.

“Inflation in Australia remains low,” said ABS chief economist Bruce Hockman. “Price falls for automotive fuel; and ongoing competition in the clothing and food retail markets has contributed to this quarter’s result.

“In addition, the ABS continues to closely monitor the impact of Cyclone Debbie on fruit and vegetable prices. While strong price rises were recorded for select fruit and vegetables such as tomatoes, beans, cucumbers, melons, berries and bananas in the June quarter 2017 – these rises were offset by falls in seasonally available fruits such as oranges, mandarins and apples.”

More to come… 


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