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Inflation edges closer to RBA target on higher petrol prices

·Personal Finance Editor
·2-min read
Color image of the famous Sydney Pitt Street with big crowds.
(Source: Getty)

The cost of consumer goods rose 0.6 per cent in the March quarter, according to the newest data released by the Australian Bureau of Statistics (ABS).

The latest Australian Bureau of Statistics (ABS) data showed the Consumer Price Index (CPI) rose 0.6 per cent in the March quarter to 1.1 per cent annually, in an uptick that inches closer to the 2-3 per cent target set by the Reserve Bank of Australia (RBA).

CPI data is the main inflation measure used by policymakers, and all eyes are on the RBA’s targets to get an idea of when interest rates will rise.

Fuel prices, which drove the uptick, rose 8.7 per cent in the quarter.

"Higher fuel prices, compared with the low prices seen in 2020, accounted for much of the rise in the March quarter CPI,” said ABS head of prices statistics Michelle Marquardt.

This was followed by medical and hospital services, which rose 1.5 per cent, and pharmaceutical products (up 5.3 per cent) due to the resetting of the Medicare and Pharmaceutical Benefits Scheme safety nets.

And many Aussies were hitting the shops over the March quarter, with a rise in accessories prices (up 7.3 per cent) reflecting higher consumer confidence and demand for jewellery.

The introduction, continuation and conclusion of a number of government schemes remained a factor in the March quarter, the ABS said.

Tertiary education fell 1.7 per cent as the Government’s Job-ready Graduates Package lowered fees, and the cost of buying new homes saw a decline of 0.1 per cent.

"The fall in new dwelling prices was due to the impact of the Federal Government's HomeBuilder grant and similar grants by the Western Australian and Tasmanian state governments,” Marquardt said.

“Without the offset from these grants, the price of new dwellings would have risen, reflecting increases in materials and labour prices in response to strong demand,” she added.

Annual inflation for the March 2021 quarter increased to 1.1 per cent following a rise of 0.9 per cent in the December quarter.

Price rises in tobacco and furnishings were partially offset by falls in rents, fuel and utilities.

Underlying inflation, which removes one-off volatile or seasonal swings, rose by 1.1 per cent which is the lowest annual movement on record. In the December quarter underlying inflation rose 1.2 per cent.

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