CPI

Ignore the as-expected high March quarter inflation readings released by the ABS on Wednesday and instead focus on what the Reserve Bank will do with them ...

“The grocery component of the group, which excludes meals out and takeaway foods, rose 4.0 per cent in the March quarter.” Ms Marquardt said. There were also notable rises in the food group (up 2.8%), “reflecting high transport, fertiliser, packaging and ingredient costs, as well as COVID-related disruptions and herd restocking due to favourable weather. Fewer grant payments made this quarter from the Federal Government’s HomeBuilder program and similar state-based housing construction programs also contributed to the rise.” said Ms Marquardt. Annual trimmed mean inflation increased to 3.7% up from 2.6% in the December quarter. Ms Marquardt said: “Annual trimmed mean inflation was the highest since 2009. Main contributors to the rise in food prices included vegetables (+6.6 per cent), waters, soft drinks and juices (+5.6 per cent), fruit (+4.9 per cent) and beef (+7.6 per cent).” Head of Prices Statistics at the ABS, Michelle Marquardt, said “The most significant contributors to the rise in the March quarter CPI were new dwellings (+5.7 per cent), automotive fuel (+11.0 per cent) and tertiary education (+6.3 per cent). Euro area consumer inflation rose to a headline rate of 7.4% in March, the highest since the euro was introduced in the early 1990’s and up from 5.9% in February. Month on month the rate rose 2.4% thanks to the impact of higher energy prices from the Russian invasion of Ukraine. The UK annual rate was 7% in March (and the OECD rate was 7% in February). The UK lifted its key Bank Rate 0.25% in March to 0.75%, the third rate rise (like the RBNZ) and the rate is now back to pre-Covid levels. Canada’s inflation rate jumped to 6.7% in March, up 1% from the 5.7% rate in February while core inflation rose 5.5%. The Bank of Canada lifted its key rate 0.50% to 1% in April and like the RBNZ, is seen as lifting rates again in May. The US reported a headline rate of 8.5% in the year to March, the highest since 1981, rising from a 7.9% rate in February. Month on month the rate was up 1.2% and the core rate was an annual 6.5%. The fed has already raised its key rate by 0.25% and will add at least a 0.50% boost to that next Wednesday. The surge in headline inflation to an annual reading fo 5.1% in the March quarter (up from 3.5% in the final quarter of 2021 was driven by a 35.1% jump in the cost pf petrol and diesel (thanks mostly to Russia’s invasion of Ukraine) and a 13.7% rise in new dwelling costs (the costs of the house price boom coming back to bite us).

Australian Bureau of Statistics with the data. Headline CPI +2.1% q/q • expected 1.7% q/q, prior 1.3% For the y/y, +5.1% • expected 4.6%, prior 3.5%.

Both the headline and trimmed mean have come in above consensus expectations. 3.2% y/y • expected 3.3% y/y, prior was 2.7% +3.7% y/y • expected 3.4% y/y, prior 2.6% (the RBA target band is 2 to 3%, "on average, over time" (quote from the RBA).)

Head of Prices Statistics at the ABS, Michelle Marquardt, said "The CPI recorded its largest quarterly and annual rises since the introduction of the goods and ...

The grocery component of the group, which excludes meals out and takeaway foods, rose 4.0 per cent in the March quarter." Annual trimmed mean inflation increased to 3.7 per cent, up from 2.6 per cent in the December quarter. "The rise for the food group was softened by voucher programs in Sydney and Melbourne, which reduced out of pocket costs for meals out and takeaway foods. Underlying inflation measures reduce the impact of irregular or temporary price changes in the CPI. Quarterly trimmed mean inflation increased to 1.4 per cent, the strongest movement since the beginning of the series in 2002. Notable rises were also recorded across the food group (+2.8 per cent), reflecting high transport, fertiliser, packaging and ingredient costs, as well as COVID-related disruptions and herd restocking due to favourable weather. Fewer grant payments made this quarter from the Federal Government's HomeBuilder program and similar state-based housing construction programs also contributed to the rise." Ms Marquardt said: "Annual trimmed mean inflation was the highest since 2009. "Continued shortages of building supplies and labour, heightened freight costs and ongoing strong demand contributed to price rises for newly built dwellings. Annually the CPI rose 5.1 per cent, with new dwellings (+13.7 per cent) and automotive fuel (+35.1 per cent) the most significant contributors. Main contributors to the rise in food prices included vegetables (+6.6 per cent), waters, soft drinks and juices (+5.6 per cent), fruit (+4.9 per cent) and beef (+7.6 per cent). The most significant contributors to the rise in the March quarter CPI were new dwellings (+5.7 per cent), automotive fuel (+11.0 per cent) and tertiary education (+6.3 per cent). The Consumer Price Index (CPI) rose 2.1 per cent in the March 2022 quarter and 5.1 per cent annually, according to the latest data from the Australian Bureau of Statistics (ABS).

Australian Council of Trade Unions President Michele O'Neil says the CPI figures released today show the government's projection for wages in the federal ...

“And in fact, working people stand to lose $2,000 on average in the first six months of this year – that’s how much wages are going backwards, and that’s on top of $800 that real wages went backwards in 2021.” “These are shocking figures … for working people because what it shows is that the government’s projection, of just over a month ago, in the budget, about what was happening to wages, it was so far out, they completely got it wrong,” Ms O’Neil told Sky News Australia. Australian Council of Trade Unions President Michele O’Neil says the CPI figures released today show the government’s projection for wages in the federal budget was “completely” wrong.