By Leith van Onselen
The Australian Bureau of Statistics (ABS) has just released Producer Price Index (PPI) data for the March quarter, which has registered a -0.3% quarterly fall in final (stage 3) prices and an increase of only 1.4% over the year:
The -0.3% fall in final (stage 3) prices was driven primarily by falls in the prices received for other agriculture (-17.7%), building construction (-0.2%) and industrial machinery and equipment manufacturing (-2.4%), partly offset by rises in the prices received for electricity, gas and water supply (+2.1%) and tobacco product manufacturing (+7.8%).
The below chart shows the quarterly change in final PPI by component since 2005:
And below is a time-series of final PPI dating back to the beginning of the series. Note the huge fall in imported costs reflecting the steady appreciation of the Australian dollar:
Other things equal, this benign result should strengthen the likelihood that the Reserve Bank will reduce official interest rates at next month’s meeting.
