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6401.0 - Consumer Price Index, Australia, Mar 2011 Quality Declaration 
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 27/04/2011   
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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



FOOD (+2.9%)

The food group recorded an increase in the March quarter 2011. The most significant contributors were vegetables (+16.0%) and fruit (+14.5%). The rise in vegetables was driven by ongoing unfavourable weather conditions in some growing areas, which resulted in lower yields and short supplies for some types of vegetables. The rise in fruit prices was mainly attributable to an increase of approximately 100% in the price of bananas during the March quarter 2011 due to shortages created by Cyclone Yasi in February 2011. Milk (-6.2%) provided the most significant offset, due to discounting across supermarkets.

Over the twelve months to the March quarter 2011, seventeen out of the twenty six food categories rose contributing to a 4.3% price rise across the food group. Increases were mainly driven by general price rises in fruit (+24.9%), and vegetables (+18.7%). Milk (-6.2%) recorded the most significant offsetting price movement.


TRANSPORTATION (+2.7%)

The main contributors to the increase in the transportation group in the March quarter 2011 were automotive fuel (+8.8%) and urban transport fares (+1.0%). Motor vehicles (-0.5%) recorded the only offsetting fall.

Automotive fuel rose in October (+2.5%), November (+0.8%), December (+4.2%), January (+2.4%), February (+2.2%) and March (+4.8%).

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


Over the twelve months to the March quarter 2011, the transportation group rose 3.0% primarily due to increases in automotive fuel (+9.3%) and other motoring charges (+7.6%). Motor vehicles (-1.4%) recorded the only offsetting fall.


HOUSING (+1.3%)

The housing group recorded an increase in the March quarter 2011. The main contributors to the movement were electricity (+5.1%), rents (+1.3%) and house purchase (+0.8%).

Electricity prices rose in the March quarter 2011 mainly due to tariff increases in Adelaide (+19.2%), Melbourne (+12.6%) and Hobart (+9.3%).

Over the twelve months to the March quarter 2011, the housing group rose 4.8% with increases in all categories. The main contributors were rents (+4.5%), electricity (+11.7%), house purchase (+2.6%) and water and sewerage (+12.8%).


FINANCIAL AND INSURANCE SERVICES (+2.6%)

The main contributor to the increase in the financial and insurance services group this quarter was deposit and loan facilities (+4.6%), which include both direct fees and prices derived from interest rate margins. The price of services charged by financial institutions varied across the range of products covered in the CPI. There were increases in the prices of services charged on both deposit products and loan products in the March quarter 2011. For more details on calculating prices of financial services, please see the appendix in the June quarter 2008 CPI publication.

Insurance services recorded an increase of 1.2% in the March quarter 2011, driven mainly by higher premiums for house insurance and household contents insurance.

Over the twelve months to the March quarter 2011, the financial and insurance services group recorded an increase of 2.8%. This was due to increases in deposit and loan facilities (+3.3%), other financial services (+2.1%), and insurance services (+3.0%).


HEALTH (+3.9%)

The health group recorded an increase in the March quarter 2011 with all capital cities registering a rise. The main contributor was pharmaceuticals (+12.5%). Pharmaceuticals prices rose as a result of the cyclical reduction in the proportion of consumers who qualify for subsidised medications under the Pharmaceuticals Benefit Scheme at the start of each calendar year.

Hospital and medical services (+2.1%) recorded an increase in the March quarter 2011 mainly due to the cyclical reduction in the proportion of consumers who qualify for subsidies for out-of-hospital medical expenses under the Medicare Plus safety net at the start of each calendar year.

Over the twelve months to the March quarter 2011, the health group rose 4.1% mainly due to increases in hospital and medical services (+6.0%) and dental services (+2.8%).


EDUCATION (+5.7%)

The education group recorded a rise in the March quarter 2011, with the commencement of the new school year. Increases in secondary education (+6.8), tertiary education (+4.9%), and preschool and primary education (+5.4%) drove this movement.

Over the twelve months to the March quarter 2011, the education group rose 5.9%.


HOUSEHOLD CONTENTS AND SERVICES (-1.6%)

The household contents and services group fell in the March quarter 2011, with decreases in furniture (-6.2%) and towels and linen (-5.2%) mainly due to post Christmas sales.

Over the twelve months to the March quarter 2011, the household contents and services group fell 0.5%. This decrease was predominantly due to falls in furniture (-2.8%) and major household appliances (-5.0%).


ALCOHOL AND TOBACCO (+1.1%)

The alcohol and tobacco group recorded an increase in the March quarter 2011. The main contributor to the rise was tobacco (+2.1%) partially due to the effects of the federal excise tax increase from 1 February 2011.

Over the twelve months to the March quarter 2011, the alcohol and tobacco group rose 11.2% driven by increases in tobacco (+27.5%) which was mainly due to the effect of the 25% increase in federal excise on tobacco implemented on 30 April 2010.


RECREATION (-0.6%)

The fall in the recreation group in the March quarter 2011 was mainly due to decreases in audio, visual and computing equipment (-7.2%) and overseas holiday travel and accommodation (-1.6%). The most significant offset was recorded in other recreational activities (+2.5%).

Over the twelve months to the March quarter 2011, the recreation group fell 1.5%. The main contributors to the movement were audio, visual and computing equipment (-19.5%) and overseas holiday travel and accommodation (-2.5%). This was partially offset by a rise in other recreational activities (+3.8%).

In the CPI, airfares are collected in advance (at the time of payment), but only used in the CPI in the quarter in which the trip is undertaken. Overseas airfares are collected two months in advance (January for travel in March) and domestic airfares are collected one month in advance (January for February).


CLOTHING AND FOOTWEAR (-0.7%)

The clothing and footwear group recorded a decrease in the March quarter 2011. The main contributors to the movement were children's and infants' clothing (-3.9%) and men's outerwear (-2.7%).

Over the twelve months to the March quarter 2011, the clothing and footwear group fell 1.3%. The main contributor to the movement was women's outerwear (-2.7%). Accessories (+3.0%) recorded the largest offsetting annual movement.


COMMUNICATION (+0.1%)

The communication group recorded a rise in the March quarter 2011 mainly due to a rise in telecommunication (+0.2%).

In the twelve months to the March quarter 2011, the communication group recorded a fall of 0.2% due to a decrease in telecommunication (-0.4%).


TRADABLES AND NON-TRADABLES

The tradables component (see table 8) of the All groups CPI rose 1.8% in the March quarter 2011. 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 most significant contributors to the 2.0% rise in the tradable goods component were automotive fuel, vegetables, fruit, pharmaceuticals and tobacco. The most significant offsetting falls were in furniture, audio, visual and computing equipment and motor vehicles. The decrease in the tradable services component of 1.6% was driven by overseas holiday travel and accommodation.

The non-tradables component of the All groups CPI rose 1.4% in the March quarter 2011. 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-tradable goods component rose 0.9% mainly due to price increases for electricity, house purchase and take away and fast foods. The most significant offsetting movement was in milk. The non-tradable services component rose 1.6%, due to increases in deposit and loan facilities, rents, secondary education, tertiary education and hospital and medical services.

Over the twelve months to the March quarter 2011, the tradables and non-tradables components both rose 3.3%. This compared to tradables rising 1.6% and non-tradables rising 3.4% through the year to December quarter 2010. The main increases in tradables were for tobacco, automotive fuel, fruit and vegetables. The main decreases in tradables were in audio, visual and computer equipment, motor vehicles, furniture and overseas holiday travel and accommodation. The main contributors to non-tradables were rises in rents, electricity, house purchase, hospital and medical services, deposit and loans facilities and water and sewerage. The largest offsetting movements were in milk, domestic holiday travel and accommodation and telecommunication.


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