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6401.0 - Consumer Price Index, Australia, Jun 2010 Quality Declaration 
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 28/07/2010   
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MAIN CONTRIBUTORS TO CHANGE



CPI GROUPS

The discussion of the CPI groups below is ordered in terms of their absolute significance to the change in All groups index points for the quarter (see tables 6 and 7).

Weighted average of eight capital cities, Percentage change from previous quarter
Graph: Weighted average of eight capital cities, Percentage change from previous quarter



ALCOHOL AND TOBACCO (+5.9%)

The rise in the alcohol and tobacco group in the June quarter 2010 was largely due to a 15.4% increase in tobacco prices following a 25% increase in excise tax on the 30th of April 2010 and some price rises. This was the largest increase in the price of tobacco since December quarter 1975 when prices increased 18.8%. There were also increases in beer (+1.3%) and wine (+0.3%) due to the cessation of specialling and some price rises. The only offset was spirits (-0.2%).

Over the twelve months to June quarter 2010, the alcohol and tobacco group rose 8.7% due to increases in tobacco (+17.1%), beer (+6.1%), spirits (+2.6%) and wine (+1.5%).


HOUSING (+0.6%)

The housing group recorded an increase this quarter due mainly to rises for rents (+1.1%) and house purchase (+0.6%). Rents increased in all cities ranging from Sydney and Darwin (+1.2%) to Perth (+0.9%). House purchase increased in all cities ranging from Perth (+1.1%) to Brisbane and Darwin (+0.2%). Electricity (-0.6%) recorded a small decrease due to a seasonal switch to off-peak pricing in Melbourne and Adelaide.

Over the twelve months to June quarter 2010 the housing group rose 5.8% mainly due to rises in electricity (+18.2%), house purchase (+3.9%) and rents (+4.4%).


HEALTH (+2.2%)

The major contributor to the increase in the health group this quarter was hospital and medical services (+3.8%) which rose mainly as a result of increases in private health fund premiums from 1 April 2010. The only offset was pharmaceuticals (-1.3%), mainly due to the effect of the Pharmaceutical Benefits Scheme safety net.

Over the twelve months to June quarter 2010, the health group rose 5.0% due to increases in hospital and medical services (+6.7%), dental services (+4.0%) and pharmaceuticals (+1.2%).


TRANSPORTATION (+0.7%)

There was an increase in the transportation group this quarter with the most significant rise for automotive fuel (+2.1%). Motor vehicle repair and servicing (+0.8%) and other motoring charges (+1.4%) also recorded increases. The major offsets were urban transport fares (-1.6%), motor vehicles (-0.2%) and motor vehicle parts and accessories (-0.1%).

Automotive fuel rose in January (+3.6%), fell in February (-2.5%), rose in March (+4.6%), fell in April (-0.5%), rose in May (+1.5%) and fell in June (-1.4%).

The following graph shows the pattern of the average daily prices for unleaded petrol for the eight capital cities over the last fifteen months.

Diagram: TRANSPORTATION (+0.7%)

Over the twelve months to June quarter 2010, the transportation group rose 3.2%. The main contributor was automotive fuel (+7.6%). There were also increases in other motoring charges (+7.7%), motor vehicle repair and servicing (+2.2%), urban transport fares (+2.6%), and motor vehicle parts and accessories (+0.4%) which was partially offset by motor vehicles (-0.7%). The general rate of customs duty on motor vehicle imports was cut from 10% to 5% on 1 January 2010.


HOUSEHOLD CONTENTS AND SERVICES (+0.9%)

The household contents and services group recorded a rise in the June quarter 2010 with increases in furniture (+2.0%), glassware, tableware and household utensils (+6.2%) and towels and linen (+2.8%). These increases were largely due to cessation of specials offered in the March quarter 2010. Major household appliances (-0.7%) and toiletries and personal care products (-0.3%) recorded decreases in the June quarter 2010.

Over the twelve months to June quarter 2010, the household contents and services group rose 0.2%. This increase was predominantly due to rises in other household services (+3.9%) and hairdressing and personal care services (+3.1%).


FINANCIAL AND INSURANCE SERVICES (+0.2%)

The major contributor to the increase in financial and insurance services this quarter was other financial services (+0.8%) driven by increases in real estate agent fees and taxes on transfers. Insurance services (-0.5%) recorded a partial offsetting fall due to increased competition in motor vehicle insurance premiums in some cities.

Deposit and loan facilities (-0.1%), which include both direct fees and prices derived from interest rate margins, recorded a small fall during the June quarter 2010. The prices of services charged by financial institutions varied across the range of products covered in the CPI. There was a decrease in the price of services charged on some loan products. This was partially offset by an increase in the price of services charged on many deposit products. This resulted in a small negative price change overall. For more details on calculating prices of financial services, please see the appendix in the June quarter 2008 publication.

Over the twelve months to June quarter 2010, the financial and insurance services group recorded an increase of 3.9%. This was due to increases in deposit and loan facilities (+6.4%), insurance services (+5.2%), and other financial services (+0.4%).


RECREATION (-1.8%)

The recreation group fell 1.8% in the June quarter 2010, the largest quarterly fall since the series began in June quarter 1989. The fall this quarter was mainly due to domestic holiday travel and accommodation (-6.0%), audio, visual and computing equipment (-6.3%) and overseas holiday travel and accommodation (-1.9%). The most significant offset was pets, pet foods and supplies (+4.5%).

The drop for domestic holiday travel and accommodation was due to significant discounting on domestic airfares as well as low season pricing on holiday accommodation. Audio, visual and computing equipment recorded a large fall due to increased specialling on audio visual goods.

Over the twelve months to June quarter 2010, the recreation group fell 0.6%. The main contributor was audio, visual and computing equipment (-19.9%). This was offset by increases in pets, pet food and supplies (+13.0%) and other recreation activities (+4.5%).


FOOD (-0.3%)

The food group fell in the June quarter 2010 with decreases for fruit (-4.8%) and vegetables (-3.0%) as a result of seasonal availability and generally favourable weather conditions which saw an increase in supply. The only exception was in Perth where damage from adverse weather conditions led to large increases in some vegetable prices. The most significant offset was soft drinks, waters and juices (+1.6%).

Over the twelve months to June quarter 2010, fifteen of the twenty six food categories rose to create a 1.4% price rise across the food group. Increases were mainly driven by general price rises in take away and fast foods (+2.2%) and restaurant meals (+2.4%). The most significant offset was fruit (-1.7%).


COMMUNICATION (-0.1%)

The major contributor to the decrease in the communications group was telecommunications, which had small price falls in part as a result of changes to the pricing structure of some internet plans.

Over the twelve months to June quarter 2010, the communications group fell 0.2%.


CLOTHING AND FOOTWEAR (0.0%)

The clothing and footwear group recorded no movement this quarter. This was due to decreases in women's footwear (-3.8%) and women's underwear (-1.5%) offset by increases in accessories (+1.7%) and children's and infants' clothing (+1.5%). Continued specialling by retailers was observed after large price falls in the March quarter 2010.

Over the twelve months to June quarter 2010, the clothing and footwear group fell 3.8%. The decrease was mainly due to falls in men's outerwear (-6.2%), women's outerwear (-3.8%) and children's and infants' clothing (-6.4%). The general rate of customs duty on textile, clothing and footwear imports was cut from 17.5% to 10.0% on 1 January 2010. The main offset was in clothing services and shoe repair (+3.2%).


EDUCATION GROUP (0.0%)

The education group recorded no movement in the June quarter 2010. Preschool primary education rose 0.1% due to a small increase in some preschool fees.

Over the twelve months to June quarter 2010, the education group rose 5.7%.


TRADABLES AND NON-TRADABLES

The tradables component (see table 8) of the All groups CPI rose 1.0% in the June quarter 2010. Prices for the goods and services in this component are largely determined on the world market. The tradables component represents approximately 42% of the weight of the CPI. The rise in the tradable goods component was driven by increases in tobacco, automotive fuel, furniture, pets, pet food and supplies. The most significant offsetting falls were in fruit, audio, visual, and computing equipment and vegetables. The decrease in the tradable services component of 1.9% was driven by overseas holiday travel and accommodation.

The non-tradables component of the All groups CPI rose 0.3% in the June quarter 2010. Prices for the goods and services in this component are largely determined by domestic price pressures. The non-tradables component represents approximately 58% of the CPI. The non-tradables goods component rose 0.4% mainly due to price increases for house purchase, beer and gas and other household fuels. The most significant offsetting movement was cakes and biscuits and electricity. The non-tradable services component rose 0.3%, due to increases in hospital and medical services, rents, other financial services, other recreation activities and motor vehicle repair and servicing. The most significant offset was domestic holiday travel and accommodation.

Over the twelve months to June quarter 2010, tradables rose 1.4% and non-tradables rose 4.2%. This compares to tradables rising 1.1% and non-tradables rising 4.2% through the year to March quarter 2010. The main increases in tradables were for tobacco, automotive fuel, pets, pet foods and supplies, soft drinks, waters and juices and vegetables. Decreases in tradables were in audio, visual and computing services, men's outerwear, women's outerwear, motor vehicles and children's and infants' clothing. The main contributors to non-tradables were electricity, house purchase, water and sewerage, beer, gas and other household fuels and take away and fast foods. The largest offsetting movements were in eggs, jams, honey and sandwich spreads and bacon and ham.


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