Inflation unexpectedly strong in late 2013

news.com.au
January 22, 2014
PRICE pressures were less subdued than economists had expected in the final three months of 2013, but they are unlikely to have an impact on interest rates just yet.
The consumer price index for the December quarter rose 0.8 per cent after a 1.2 per cent jump in the September quarter, the Australian Bureau of Statistics said on Wednesday.
However, this was stronger than the 0.5 per cent increase expected by economists.
The annual inflation rate was 2.7 per cent compared with 2.2 per cent previously, but remains within the Reserve Bank of Australia’s (RBA) two to three per cent target band.
Among the most significant price rises in the quarter were for domestic holiday travel and accommodation which rose 6.9 per cent.
Other strong rises included those for fruit (8.1 per cent), vegetables (7.1 per cent), new dwelling purchase by owner-occupiers (1.0 per cent), international holiday travel and accommodation (2.6 per cent) and tobacco (2.2 per cent).
The most significant offsetting price fall was for automotive fuel, down 1.1 per cent.
More crucial to the interest rate outlook was unexpectedly strong underlying inflation.
Key measures of underlying inflation rose by an average 0.9 per cent in the December quarter for an annual rate of 2.6 per cent.
Economists had forecast a more subdued rise of 0.6 per cent for an annual rate of 2.3 per cent.
The RBA will hold its first board meeting of the year on February 4.
Financial markets expect the central bank to keep the cash rate at an all-time low of 2.5 per cent at the meeting.