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Inflation Up Slightly; Hockey Blames Carbon Tax

Inflation edged up slightly in the December quarter and Treasurer Joe Hockey says it’s the fault of the carbon tax.

HockeyThe December quarter rise in the Consumer Price Index was 0.8%. Headline inflation was 2.7% through the year, up from 2.2% in the September quarter.

Treasurer Joe Hockey said: “The inflation rate continues to be impacted by Labor’s Carbon Tax.” He said electricity prices have increased by 22.5% since the introduction of the tax in July 2012. He called on Labor senators to pass the carbon tax repeal legislation when Parliament meets again in February.

Hockey also commented on new figures from the International Monetary Fund which project that global economic growth will increase from 3% in 2013 to 3.7% in 2014. He said: “The IMF underscores the importance of managing vulnerabilities, notwithstanding the expected strengthening in global economic activity.”

Media release from Treasurer Joe Hockey.

Consumer Price Index – December Quarter 2013

Today’s release of the Consumer Price Index (CPI) for the December Quarter shows that inflation is slightly above the middle of the Reserve Bank of Australia’s target band.

The CPI rose 0.8 per cent in the December quarter 2013, following a 1.2 per cent rise in the September quarter. Headline inflation was 2.7 per cent through the year, following 2.2 per cent growth through the year to the September quarter.

Underlying inflation was 0.9 per cent in the December quarter – the highest quarterly increase since the June quarter of 2011 – and 2.6 per cent through the year.

The major contributors to December quarter inflation were a seasonal increase in holiday travel and accommodation prices, an increase in fruit and vegetable prices reflecting poor growing conditions in some areas, and a rise in tobacco prices due to excise increases.

Prices also fell for a number of categories in the December quarter. Clothing and footwear prices fell by 1.1 per cent, health prices fell by 0.5 per cent as more consumers reached the pharmaceutical and medical benefits safety net, and transport prices fell by 0.1 per cent because of cheaper fuel.

The inflation rate continues to be impacted by Labor’s Carbon Tax. Since the introduction of this tax in July 2012, electricity prices have increased 22.5 per cent, and gas and other household fuels have increased 19.3 per cent.

Labor Senators should stop standing in the way of cost of living relief for Australian families and vote to repeal the carbon tax when Parliament resumes.

The repeal of the Carbon Tax will create a stronger economy with more jobs and will, on average, save families $550 next financial year.

Media release from Treasurer Joe Hockey.

IMF January 2014 World Economic Outlook Update

In its January 2014 World Economic Outlook (WEO) Update the IMF presents a cautiously encouraging outlook for the global economy.

The IMF projects global economic growth to increase from 3 per cent in 2013 to 3.7 per cent in 2014, slightly higher than the 3.6 per cent forecast in the October 2013 WEO.

The IMF’s outlook for the United States has improved in 2014 owing to strengthening domestic demand and support from the recent budget deal. The IMF now expects the US economy to grow 2.8 per cent this calendar year.

The update also highlights that the Euro area is turning the corner from recession to recovery, with the IMF projecting growth to strengthen to 1.0 per cent in 2014 and 1.4 per cent in 2015, slightly upgrading its October projections.

The IMF continues to project strong growth for our region, with forecasts for China and India slightly higher since the October WEO. China and India are now expected to grow 7.5 and 5.4 per cent respectively in 2014.

More broadly in emerging market economies, stronger external demand from advanced economies will boost growth, although domestic weaknesses remain. The IMF notes that increased financial market and capital flow volatility will remain a concern for emerging market economies as the US begins to normalise its monetary policy.

The IMF underscores the importance of managing vulnerabilities, notwithstanding the expected strengthening in global economic activity.

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