July 28, 2010
The ABS Consumer Price Index (CPI) rose 0.6 percent in the June quarter, compared with a rise of 0.9 percent in the March quarter.
The most significant price rises were for tobacco (+15.4 percent), hospital and medical services (+3.8 percent), automotive fuel (+2.1 percent), rents (+1.1 percent) and house purchase (+0.6 percent).
Meanwhile, the most significant offsetting price falls were for domestic holiday travel and accommodation (–6 percent), fruit (–4.8 percent), audio, visual and computing equipment (–6.3 percent), vegetables (–3 percent), and overseas holiday travel and accommodation (–1.9 percent).
As reported by the ABS today, the CPI rose 3.1 percent through the year to June quarter, compared with a rise of 2.9 percent through the year to March quarter.
CASH RATE CAUTION
Mortgage Choice CEO Michael Russell says the latest ABS CPI strongly supports a hold to the cash rate for at least the September quarter.
"The release of today's Consumer Price Index shows core inflation is only nominally outside of the Reserve Bank's two to 3 percent target band. With this, the Bank has little reason to lift official interest rates at its August meeting," Russell says.
"Consumer sentiment is still volatile so the Reserve Bank needs to do all that it can to protect the positivity of Australians. We cannot risk any deterioration in the confidence of everyday consumers and business owners, which will in turn have a negative effect on the economy,” he says.
"We have not yet seen the full extent of the impact of a quick succession of interest rates from October to May. Nor do we understand the impact of global economic turbulence that continues today."