Inflation has hit a 13-year high of 5.0% with a 1.2% rise in the September quarter Consumer Price Index.
This is the text of a media release from the Treasurer, Wayne Swan.
Today’s inflation figures show that Australians are continuing to face higher prices at the same time as they feel the impacts of the global financial crisis.
The September quarter CPI rose by 1.2 per cent in the quarter to be 5.0 per cent higher through the year. Underlying inflation was 1.2 per cent in the quarter and 4.7 per cent through the year.
But families can take some comfort that this is expected to be the peak of inflation in Australia, before it moderates over the period ahead.
Today’s inflation figures predate the recent intensification of the global financial crisis. Looking forward, inflationary pressures are expected to moderate as world growth slows. Weaker global price pressures are already evident in the prices of key commodities, such as oil which is well down on recent peaks. These price falls are not fully reflected in the September quarter.
Housing costs increased by 2.6 per cent in the quarter, reflecting increases in rents and house purchase and utility prices.
Prices for financial and insurance services contributed around 0.2 of a percentage point to inflation, reflecting rises in the price of deposit and loan facilities and insurance premiums as the higher funding costs from the global financial crisis were passed on to households in July.
Food prices rose by 1.4 per cent in the quarter, contributing around 0.2 of a percentage point to quarterly inflation, mainly due to price rises for fruit and bread.
Automotive fuel prices increased by 2.0 per cent in the September quarter, following an 8.7 per cent increase in the June quarter, contributing around 0.1 of a percentage point to inflation in the September quarter.
Child care prices fell by 22.9 per cent in the quarter as a result of the Government’s Budget decision to increase the child care tax rebate from 30 per cent to 50 per cent from 1 July 2008.
With the global financial crisis recently entering a new and dangerous phase, the Government has taken decisive action to strengthen the economy and support households in these difficult global times.
The Government will continue to responsibly target spending and implement policies to tackle capacity constraints in the economy, including investments in the areas of infrastructure, health and skills. These policies will help to maintain downward pressure on inflation over time.