CPI rate breaks RBA barrier

THE consumer price index rose 0.8 per cent during the June quarter according to new data from the Australian Bureau of Statistics.

This has pushed the annual CPI rate to 3.2 per cent – just above the ceiling of 3 per cent imposed by the Reserve Bank.

The narrow Treasury underlying measure rose 0.7 per cent and the broader underlying measure rose 0.6 per cent.

According to Westpac economist Justin Smirk, the outcome was reasonable given the conjuncture of unfavourable factors such as the low Australian dollar, high oil prices, rising insurance premiums and the pre-GST effects.

Petrol prices rose 3.2 per cent while fruit and vegetable prices rose 3.5 per cent.

Insurance costs rose again with motor vehicle insurance up 11.6 per cent during the June quarter and house insurance rising nearly 8 per cent.

A surprise in the figures, given the strength of the construction industry, was the low increase in house prices which rose only 0.4 per cent.

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