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Consumer Price Index - June Quarter 1999

TREASURER

NO.046

The June quarter 1999 CPI confirms that inflation in Australia remains well in check, in an environment of strong economic growth.

The All Groups CPI rose 0.4 per cent in the June quarter 1999 and 1.1 per cent in the year to the June quarter. The Government's 30 per cent rebate on private health insurance, which took effect in the March quarter 1999, contributed to the low through the year result.

The underlying inflation rate was 0.4 per cent in the June quarter 1999 and 1.7 per cent in the year to the June quarter. Publication of this series will be discontinued from the September quarter 1999 (a year after the introduction of the 13th Series of the CPI).

Australia's inflation rate remains significantly below the OECD average, enhancing Australia's reputation as a high growth, low inflation economy.

Fresh fruit and vegetable prices fell 3.5 per cent in the June quarter, reversing some of the increases recorded in earlier quarters in response to the unfavourable seasonal conditions of late last year. Fresh fruit prices fell 0.8 per cent in the June quarter and fresh vegetable prices fell 6.2 per cent. In total, food prices rose 0.2 per cent in the June quarter.

Petrol prices rose 5.2 per cent in the June quarter, in response to higher world oil prices. While transportation prices in total rose 1.4 per cent, motor vehicles prices fell 0.4 per cent. Motor vehicle prices have now fallen for five consecutive quarters and are at their lowest level since the June quarter 1992.

The retail price of imported goods fell 0.1 per cent in the June quarter and 1.9 per cent in the year to the June quarter, reflecting falling import prices across the docks in recent quarters and ongoing strong domestic competition. The price of overseas holiday travel and accommodation increased by 7.3 per cent in the June quarter, largely reflecting seasonal influences. In contrast, the price of domestic holiday travel and accommodation fell by 6.1 per cent.

The success of labour and product market reforms are evident in Australia's continued low inflation outcomes. Price pressures remain subdued, with strong growth in productivity, moderate wage outcomes and continuing healthy competition. The Government believes that these reforms will provide the basis for continued economic growth and low inflation into the next century.

CANBERRA 28 July 1999

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