Fuel price pumps up in­fla­tion

Townsville Bulletin - - NEWS -

IN­FLA­TION has risen on the back of surg­ing petrol prices, but econ­o­mists don’t be­lieve the rise is strong enough to sway the Re­serve Bank on an­other in­ter­est rate cut.

The Con­sumer Price In­dex, the key mea­sure of in­fla­tion, lifted 0.7 per cent in the June quar­ter, of­fi­cial data out yes­ter­day showed.

That took in­fla­tion to 1.5 per cent in the year to June, weaker than econ­o­mists’ ex­pec­ta­tions of a 1.7 per cent rise and well be­low the RBA’s 2- 3 per cent tar­get band.

Un­der­ly­ing in­fla­tion, which strips out the ef­fects of volatile price move­ments, rose an av­er­age of 0.55 per cent in the June quar­ter for an an­nual rate of 2.3 per cent.

The re­sults were un­likely to pre­vent the Re­serve Bank from cut­ting rates from their his­toric lows of 2 per cent if needed, econ­o­mists said.

“It shouldn’t force the RBA’s hand ei­ther way,” St Ge­orge se­nior econ­o­mist Jo Hor­ton said.

“At this stage we’re ex­pect­ing the RBA to leave rates on hold for an ex­tended pe­riod.”

Ms Hor­ton said petrol prices were a big fac­tor in the re­sult, ris­ing 12 per cent from the first quar­ter of 2015.

West­pac chief econ­o­mist Bill Evans was sur­prised by the soft re­sult for food, which rose just 0.1 per cent in the quar­ter.

“The down­ward sur­prise on food was be­hind the softer head­line print, but core was on our ex­pec­ta­tions,” Mr Evans said.

An econ­o­mist from Com­mSec, Sa­vanth Se­bas­tian, said the in­fla­tion data would prob­a­bly not prompt any rate move by the RBA.

BIG­GER TAKE: Ash­leigh McLean is con­cerned about ris­ing petrol prices.

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