Four highlights of the Australia’s September quarter inflation figures


As per the Australian Bureau of Statistics (ABS), the Consumer Price Index (CPI) has surged 1.3 per cent through the year to September quarter 2016 compared with a rise of 1.0 per cent over the twelve months to the June quarter 2016. Primarily, the CPI rose 0.7 per cent in the September quarter 2016 post the 0.4 per cent growth witnessed in the June quarter 2016. Key aspects to note here include the following:

Better than expected growth boosted by fruit and vegetables: Headline consumer prices jumped up at a faster pace than the market’s expectation at the back of rise in fruit and vegetables under the food and non-alcoholic beverages group. The most significant price rises have been for fruit (up 19.5 per cent), vegetables (up 5.9 per cent), electricity (up 5.4 per cent) and tobacco (up 2.3 per cent). The rise in fruit and vegetable prices came at the back of adverse weather conditions (floods etc.) that affected the supply of major growing areas. The food and non-alcoholic beverages group jumped up 1.5% over the last twelve months and the rise in vegetables (up 11.9 per cent) has been enormous. There was a 0.5 per cent rise in non-tradables prices as that indicated by wages etc. in the quarter. The key inflation drivers such as labour costs look very subdued.


September Inflation Data (Source: Australian Bureau of Statistics)

Fuel offsetting the jumps to certain extent: The rises in aforementioned categories were partially offset by fuel which slipped by 2.9 per cent and communication which slipped 2.3 per cent. Over the last twelve months, the communication group plunged 7.5 per cent. The main contributor to the fall is telecommunication equipment and services which slipped 7.9%. On the other hand, all fuel types recorded decreases this quarter with the exception of diesel.


Average Price of Unleaded Petrol (Source: Australian Bureau of Statistics)

Subdued core inflation: On the other hand, core inflation has been said to be more subdued as the trimmed mean rose 0.4 per cent on a quarter basis and 1.7 per cent on year over year basis.

Boost to the Australian dollar: The overall scenario has helped the Australian dollar rise at the back of views on any future interest rate cuts. Market indicated for chances that the Reserve Bank of Australia might now maintain its official cash rate for the remaining of the year and through the early part of 2017.


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