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6401.0 - Consumer Price Index, Australia, Sep 2008 Quality Declaration 
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 22/10/2008   
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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 (+2.6%)

All categories of housing recorded price rises this quarter at the weighted average of the eight capital cities level. The main contributors were rents (+2.1%), water and sewerage (+12.3%), house purchase (+1.3%), electricity (+4.6%) and property rates and charges (+6.1%). This is the largest quarterly increase for housing since the September quarter 2000.

Rents rose in every capital city, with the highest increases in Perth (+3.2%), Darwin (+3.0%) and Brisbane (+2.9%). Hobart showed the lowest rent increase of 0.9%.

Annual reviews of prices by State and local government authorities and utility providers led to a number of price rises. Water and sewerage prices rose in all capital cities, with increases ranging from 3.5% in Darwin to 17.7% in Melbourne. Electricity prices rose in six capital cities, with the highest increases in Sydney (+8.9%), Brisbane (+8.3%) and Canberra (+6.7%), were unchanged in Perth, and fell in Melbourne (-1.4%) due to the Winter Energy Concession. Property rates and charges rose in all capital cities, ranging from 3.5% in Sydney and Hobart to 8.7% in Melbourne.

Increases in house purchase prices were recorded in all capital cities, with Canberra (+3.7%) and Brisbane (+2.2%) being the highest and Melbourne (+0.6%) and Sydney (+0.9%) the lowest.

Over the twelve months to September quarter 2008, the housing group rose 6.8%, which was the largest annual increase since the June quarter 2001. This rise was mainly due to rents (+8.2%), house purchase (+5.4%) and electricity (+10.1%).


FOOD (+1.4%)

Food prices rose in most categories in all capital cities. The most significant contributors to the increase in food prices this quarter were fruit (+4.5%), bread (+4.6%), take away and fast foods (+1.3%), restaurant meals (+1.3%) and vegetables (+1.3%).

The rise in fruit prices was mainly due to price increases for bananas across all capital cities as cooler weather conditions in North Queensland resulted in reduced supplies.

Over the past year, the food group rose 3.4%, with strong positive movements in all capital cities. The increase was predominantly due to rises in take away and fast foods (+6.9%), restaurant meals (+4.5%), bread (+10.9%), milk (+10.9%) and cakes and biscuits (+9.1%). Fruit (-16.8%) provided the major offsetting decrease, driven by falls in the prices of bananas and apples.


FINANCIAL AND INSURANCE SERVICES (+1.7%)

The rise in financial and insurance services this quarter is a result of increases in deposit and loan facilities (+1.9%), insurance services (+2.9%) and other financial services (+0.7%).

Over the twelve months to September quarter 2008, financial and insurance services rose 9.5%, with increases in the prices of all components - deposit and loan facilities (+16.0%), insurance services (+9.0%) and other financial services (+1.6%).


RECREATION (+1.3%)

The rise in recreation prices this quarter was mainly due to overseas holiday travel and accommodation (+4.9%), domestic holiday travel and accommodation (+2.4%) and sports participation (+2.7%). The major offset was provided by audio, visual and computing equipment (-3.9%).

Through the year to September quarter 2008, the recreation group rose 1.6%, the fifteenth consecutive annual rise. This rise was mainly due to overseas holiday travel and accommodation (+7.8%), other recreational activities (+5.9%) and domestic holiday travel and accommodation (+2.6%). Rises were reported in six capital cites ranging from 0.1% in Canberra to 2.4% in Brisbane and Adelaide. Hobart (-3.0%) and Darwin (-0.3%) recorded falls.


TRANSPORTATION (+1.0%)

The increase in transportation costs this quarter was mainly due to the rise in the price of automotive fuel (+2.0%). There were increases in most other categories of transportation, with other motoring charges (+2.7%) and motor vehicle repair and service (+1.3%) being the most significant. There was a small offsetting fall in the price of motor vehicles (-0.7%).

Automotive fuel prices rose in April (+2.7%), May (+3.3%), June (+7.5%) and July (+0.3%), fell in August (-6.7%) then rose in September (+1.1%). The automotive fuel expenditure class contributed 0.16 index points to the increase in the All groups CPI in September quarter 2008 and 1.64 index points to the through the year change.

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 (+1.0%)

Over the twelve months to September quarter 2008, the transportation group rose 8.7%, with the main contributors being automotive fuel (+25.4%), motor vehicle repair and servicing (+3.7%), other motoring charges (+5.4%), motor vehicle parts and accessories (+5.5%) and urban transport fares (+4.4%). There was an offsetting fall in motor vehicles (-1.9%).


ALCOHOL AND TOBACCO (+1.4%)

The alcohol and tobacco group recorded a rise of 1.4% in the September 2008 quarter. All components in the alcohol and tobacco group rose this quarter, with price increases in spirits (+4.8%), tobacco (1.6%), beer (+0.8%) and wine (+0.1%).

The rises in spirits, tobacco and beer prices were mainly due to the effect of the increase in Federal excise from 1 August 2008. Spirits also incurred an additional tax in the previous quarter, which also impacted on prices this quarter.

Through the year to September quarter 2008, the alcohol and tobacco group rose 5.8%.


HOUSEHOLD CONTENTS AND SERVICES (-0.9%)

The major contributor to the fall in household contents and services this quarter was child care (-22.9%), with a less significant fall in furniture (-1.3%). The largest offsetting rise came from other household services (+2.2%), which recorded rises in all capital cities.

The drop in the net price of child care was due to the increase in the Child Care Tax Rebate (CCTR) from 30% to 50% that was implemented as of 1 July 2008. This resulted in a decrease in out-of-pocket expenses for consumers of these services. The changes to the CCTR and their impact on the CPI are discussed in further detail in the Appendix to this issue.

Through the year to September quarter 2008, the household contents and services group rose 0.9%, with increases in all capital cities. The increase was mainly due to rises in other household supplies (+4.1%) and other household services (+7.2%). Child care (-17.5%) provided the major offsetting fall, due to the increase in the CCTR implemented this quarter.


CLOTHING AND FOOTWEAR (-0.7%)

The fall in prices of clothing and footwear this quarter is mainly due to widespread specials for winter season lines across a number of categories. The only significant rise was in clothing services and shoe repairs (+1.0%).

Over the twelve months to September quarter 2008, the clothing and footwear index remained flat (0.0%) due to falls in men's footwear (-5.4%), children and infants clothing (-1.7%), men's outerwear (-0.7%) and women's outerwear (-0.7%) being offset by rises in accessories (+3.4%), clothing services and shoe repairs (+3.2%) and children's footwear (+1.6%).


EDUCATION (-0.5%)

The 2.4% fall in education was entirely due to the increase in child care benefits flowing from the changes to CCTR that apply for children in pre-school and primary school. Through the year to September quarter 2008, the education group rose 4.7%.


HEALTH (-0.2%)

The decrease in the health costs was largely due to a fall in the net cost of pharmaceuticals (-3.9%). This was partially offset by increases to hospital and medical services (+0.9%) and dental services (+0.7%).

The net cost of pharmaceuticals fell mainly due to the cyclical effect of the Pharmaceutical Benefits Scheme safety net, with more consumers exceeding the PBS safety net and receiving subsidised prescription pharmaceuticals.

The net cost of hospital and medical services rose as a result of increased gross prices across services, falls in the percentage of bulk billed services, offset by the cyclical effect of the Medicare Plus safety net.

Through the year to September quarter 2008, the health group rose 5.1% due to increases in hospital and medical services (+6.5%), dental services (+4.6%) and pharmaceuticals (+2.0%).


COMMUNICATION (+0.2%)

The rise in communication costs was due to increases in the cost of telecommunication (+0.2%) and postal services (+2.8%).

Over the twelve months to September quarter 2008, the cost of communication rose 0.2%.


TRADABLES AND NON-TRADABLES

The non-tradables component (see table 8) of the All groups CPI rose 1.6% in the September quarter. This component includes goods and services whose prices are largely determined by domestic price pressures and represents approximately 58% of the CPI. Within non-tradables, the services component rose 1.2%, mainly due to rents, deposit and loan facilities, property rates and charges, domestic holiday travel and accommodation and insurance services. The only significant offsets was provided by child care. The non-tradable goods component rose 2.2% mainly due to price increases for water and sewerage, house purchase and electricity.

The tradables component of the All groups CPI rose 0.7%. This component includes goods and services whose prices are largely determined on the world market and represents approximately 42% of the weight of the CPI. The tradable goods component rose 0.4%, driven by increases in automotive fuel, with less significant contributions from fruit, spirits and tobacco. Pharmaceuticals, audio, visual and computing equipment and motor vehicles provided the most significant offsetting falls.

Over the twelve months to September quarter 2008, non-tradables rose 6.1% and tradables rose 3.4%. This compares with rises of 5.6% and 2.9%, respectively, for these components through the year to June quarter 2008. The main drivers in non-tradables were deposit and loan facilities, rents, house purchase, hospital and medical services, take away and fast foods, electricity and insurance services. A fall in the net cost of child care provided a significant offset. Automotive fuel was the main contributor to the rise in tradables, with less significant contributions from overseas holiday travel and accommodation, spirits and tobacco. There were significant falls in fruit, audio, visual and computing equipment and vegetables.


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