Inflation nudges higher

April 23, 2008, 9:18pm,  123 views

The consumer price index rose by 1.3 percent in the March quarter, stronger than market forecasts of a 1.1 per cent rise and the fastest pace since the 2006 June quarter.

The annual rate of inflation jumped to 4.2 per cent, its strongest rise since the 2001 June quarter.

Surging oil prices are behind much of the increase.

The Australian Bureau of Statistics figures show the most significant contributors to the overall increase this quarter were automotive fuel (up 5.4 percent), pharmaceuticals (up 13.1 percent), electricity (up six percent), rents (up two percent) and other financial services (up two percent).

But the cost of furniture fell (down 3.6 percent) together with audio, visual and computing equipment (down 5.8 percent), domestic holiday travel and accommodation (down 1.4 percent).

Sadly, the rising petrol price dampens hopes of a reduction in interest rates. In fact, with inflation at four percent the Reserve Bank may increase rates again later this year.

Australia is on the brink of a housing affordability crisis.