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6401.0 - Consumer Price Index, Australia, Mar 2008 Quality Declaration 
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 23/04/2008   
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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



HOUSING (+1.9%)

The rise in housing this quarter was mainly due to house purchase (+1.7%), electricity (+6.0%) and rents (+2.0%).

Increases in the house purchase index were recorded in all capital cities ranging from 0.2% in Perth and Hobart to 2.4% in Adelaide. The rents index rose in all capital cities, ranging from 1.3% in Adelaide to 3.4% in Perth. At the expenditure class level there were no falls in the housing group in any city.

Through the year to March quarter 2008, the housing group rose 5.7%. This rise was mainly attributable to house purchase (+5.0%), rents (+7.1%), and electricity (+10.0%). Annually, the strongest increases in the housing group were rises in Brisbane (+7.9%), Melbourne and Hobart (both +6.2%). Perth recorded the smallest increase at the group level, at 4.5%.


FOOD (+2.1%)

The rise in the food index is due to increases in almost all categories of food, with the largest contributions being take away and fast foods (+2.3%), vegetables (+2.9%), bread (+4.0%), cakes and biscuits (+3.5%), soft drinks, waters and juices (+2.4%), poultry (+4.9%), milk (+2.4%), snacks and confectionery (+1.7%) and restaurant meals (+1.0%). There was a small fall in fruit (-0.6%) mostly due to plentiful supplies of grapes, peaches and bananas.

Over the twelve months to March quarter 2008, the food index rose 5.7%, mainly due to increases in take away and fast foods (+5.6%), vegetables (+9.7%), restaurant meals (+3.9%), milk (+11.6%) and bread (+9.0%). The only offsetting annual fall was in bacon and ham (-0.9%).


TRANSPORTATION (+1.9%)

The main contributor to the increase in the transportation index this quarter was the rise in automotive fuel (+5.4%). Most other categories in transportation also rose, with motor vehicle parts and accessories (+1.7%), urban transport fares (+1.4%) and other motoring charges (+0.8%) being the most significant. There was a small offsetting fall in motor vehicles (-0.4%).

Automotive fuel rose in October (+2.0%), November (+5.8%), December (+4.7%) and January (+1.3%), fell in February (-2.7%) then rose in March (+2.8%). The automotive fuel expenditure class contributed 0.38 index points to the increase in the All Groups CPI in March quarter 2008.

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 (+1.9%)


Over the twelve months to March quarter 2008, the transportation group rose 6.8%, with the main contributors being automotive fuel (+18.9%), motor vehicle repair and servicing (+3.5%), other motoring charges (+4.8%), urban transport fares (+5.4%) and motor vehicle parts and accessories (+6.0%). A fall in motor vehicles (-1.0%) provided the only offset.


HEALTH (+4.0%)

The rise in the health index was due to rises in pharmaceuticals (+13.1%), hospital and medical services (+1.6%) and dental services (+1.6%).

Pharmaceuticals 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. The rise in hospital and medical services reflects increases in gross fees for most medical practitioners' services, combined with a 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.

Through the year to March quarter 2008, the health group rose 4.6%, mainly due to an increase in net hospital and medical services (+5.5%).


FINANCIAL AND INSURANCE SERVICES (+1.7%)

All categories of financial and insurance services recorded rises this quarter. Other financial services rose 2.0%, deposit and loan facilities rose 1.2% and insurance services increased 2.1%.

Through the year to March quarter 2008, financial and insurance services rose 6.8% due mainly to increases in deposit and loan facilities and other financial services.

The global financial crisis has caused changes in the structure and behaviour of financial markets. Sudden shifts in structural relationships which have existed for some time mean that data supplied by businesses to the ABS and ABS editing and compilation practices may not reflect the impact of these changes fully and in a timely manner.

The ABS is working with providers and reviewing and updating, where needed, a range of methods relating to the collection and compilation of financial sector output, income, transactions, positions and prices.

Improvements have been incorporated into this publication and some will be incorporated into future publications, potentially leading to corrections.


EDUCATION (+5.2%)

All education indexes rose in the March quarter, with the commencement of the new school year. Secondary education rose 6.6%, tertiary education rose 3.8%, and preschool and primary education rose 5.8%.

Secondary education was the major contributor, mainly due to wide-spread fee increases. Both preschool and primary education fees rose with providers reporting that rises were to cover increases in wages and other operating costs.

The rise in tertiary education was mainly due to increases in both TAFE and HECS fees.

Through the year to March quarter 2008, the education group rose 4.3%.


CLOTHING AND FOOTWEAR (-2.4%)

The fall in clothing and footwear this quarter was due to falls in most categories, the most significant being accessories (-5.3%), men's outerwear (-3.3%), children and infants' clothing (-3.9%) and women's footwear (-3.6%).

End-of-summer season sales had a significant impact on the price movements in most categories this quarter. The exception was women's outerwear, which showed no aggregate movement.

Over the year to March quarter 2008, clothing and footwear fell 0.5%, with falls in most categories.


ALCOHOL AND TOBACCO (+1.0%)

All four components in the alcohol and tobacco group rose this quarter with increases in beer (+1.6%), spirits (+1.2%), wine (+0.9%) and tobacco (+0.6%).

The rises in tobacco, beer and spirits are due to the effects of the increase from 1 February in the Federal excise tax, as well as some pure price rises and the cessation of specials in some cities. The increase in wine is mainly due to the discontinuation of specials.

Over the year to March quarter 2008, the alcohol and tobacco group rose 3.8%, with increases for the year ranging from 1.7% for wine to 6.3% for beer.


HOUSEHOLD CONTENTS AND SERVICES (-0.6%)

The household contents and services group fell this quarter, mainly due to furniture (-3.6%), towels and linen (-5.5%) and glassware, tableware and household utensils (-3.4%). The strongest offsetting movement was a rise in child care (+4.5%).

The falls were mainly due to end-of-season sales across most cities. The rise in the net price of child care was mainly due to increases in gross fees, with many providers reviewing fees at the start of a new year to cover increases in wages and other running costs.

Through the year to March quarter 2008, the household contents and services group fell 0.7%, mainly due to a fall in the net child care index. This resulted from the inclusion of the Child Care Tax Rebate (CCTR) as a rebate for the first time and the additional 10% indexation of the Child Care Benefit (CCB) rates on top of the usual annual CPI indexation. See the appendix Child Care Services in the CPI in the September Quarter 2007 release of this publication.


RECREATION (-0.3%)

The fall in recreation was due mainly to audio, visual and computing equipment (-5.8%) and domestic holiday travel and accommodation (-1.4%). The major offsetting rise was in other recreational activities (+2.0%) and overseas holiday travel and accommodation (+0.7%).

Annually, Recreation rose 1.4% with the strongest rises being in overseas holiday travel and accommodation (+8.6%), other recreational activities (+5.0%) and sports participation (+5.9%).


TRADABLES AND NON-TRADABLES

The non-tradables component (see table 8) of the CPI rose 1.7% in the March quarter. 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. Within non-tradables, the services component rose 1.4%, mainly due to rents, other financial services, secondary education fees, deposit and loan facilities, tertiary education fees, hospital and medical services and preschool and primary education fees. The only significant offset was provided by domestic holiday travel and accommodation. The non-tradable goods component rose 2.4% mainly due to increases for house purchase and electricity.

The tradables component of the All groups CPI rose 0.8%. 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 tradables component was driven by increases in automotive fuel and pharmaceuticals. The most significant offsetting falls were in furniture and audio, visual and computing equipment.

Through the year to March quarter 2008, non-tradables rose 5.0% and tradables rose 3.3%. This compares with rises of 4.2% and 1.4%, respectively, for these components through the year to December quarter 2007. The main drivers in non-tradables through the year were house purchase, rents, deposit and loan facilities, other financial services and electricity. Automotive fuel was the main contributor to the rise in tradables, with less significant contributions from overseas holiday travel and accommodation, vegetables and tobacco.


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