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Economy

Oct 28, 2015

Fruit prices up, veggies down, with no inflationary worries

The Bureau of Statistics said the most significant price rises this quarter were in international holiday travel and accommodation, property rates and charges and fruit.

No sign of any inflation pressures in the September quarter in the latest Consumer Price Index data, released at 11.30am today. The headline rate of 0.5% and annual rate to the end of the September quarter of 1.5% was not a big surprise, despite lots of babble to the contrary on electronic media in the wake of the release.

The Aussie dollar fell half a cent to around 71.20 US cents as the muddleheads in the foreign exchange market reckoned the softer-than-forecast CPI means a rate cut is more possible from the RBA — that’s despite the RBA giving absolutely no sign that a rate cut is on the cards. In fact, the result confirms the RBA’s belief that the sluggish economy is keeping a lid on cost pressures, especially from the higher dollar, and it has said repeatedly it sees this situation continuing for up to two years.

The central bank’s preferred inflation measures — the trimmed mean and the weighted median — produced moderate readings for both the quarter and for the year. The trimmed mean rose 0.3% in the quarter, compared to a rise of 0.6% in the June quarter, 2015. Over the last year, it rose 2.1%, compared to a rise of 2.2% over the 12 months to the June quarter.

And the weighted median also rose 0.3% this quarter, compared to a rise of 0.5% in the June quarter 2015. Over the last year, the weighted median rose 2.2%, down from the rise of 2.4% over the 12 months to the June this year.

The quarterly rise was lower than the 0.7% rise in the three months to June, and it was within the RBA’s view of the pace of activity in the economy.

The Bureau of Statistics said the most significant price rises this quarter were in international holiday travel and accommodation, property rates and charges (all up 4.6%), plus fruit (up 8.2%). These rises were partially offset by falls in vegetables (down 5.9%), telecommunication equipment and services (off 2.0%) and automotive fuel (down 1.7%)

The 1.5% reading through the year to the September quarter was unchanged from the June quarter 2015. Inflation in the major capitals ranged from 0.2% in Canberra (and a very low annual rate of 0.6%), 0.3% in Sydney (1.9% annual) to 0.7% in Brisbane (1.5% annual) and 0.4% in Melbourne (1.4% annual).

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