Inflation back on target

rise until well into next year, economists say.

The Consumer Price Index, which measures price growth in goods and services, rose 0.5 per cent in the three months to March for an annualised rate of 2.1 per cent, official figures reveal.

It was the first time in two and a half years headline inflation had been within the RBA’s target band of 2 to 3 per cent. 2018 COMMONWEALTH GAMES HOST CITY

But core inflation, which strips out the effect of volatile price movements for products such as petrol and tobacco, was 0.4 per cent for the quarter for a more muted annualised reading of 1.8 per cent.

Price movements were varied during the quarter but the impact of post-Christmas retail discounts was apparent.

Among the big risers, petrol was up 5.7 per cent, and gas and electricity rose 3.8 per cent and 2.5 per cent respectively.

But men’s clothing and furniture retailers were in clearance mode, with prices falling 3.8 per cent and 3.5 per cent respectively.

An abundance of summer produce sent fruit prices down 6.7 per cent, although fruit and vegetables were both more than 12 per cent dearer over the full course of the year.

The housing category – which was last week criticised by Commonwealth Bank economists as not representative of the strength of the property market – was up 0.8 per cent.

Property prices across Australia’s combined capitals were 3.5 per cent higher over the same period, CoreLogic figures show.

Elsewhere, prices were beholden to seasonal effects. Education costs rose 3.1 per cent during the quarter as the school year kicked off, while pharmaceuticals were 4.9 per cent dearer following January’s tightening of the Pharmaceutical Benefits Scheme.

Economists had expected a stronger quarterly CPI lift of 0.6 per cent, and the Australian dollar dipped to US75.16¢ as a result.