The Australian Bureau of Statistics (ABS) today released Producer Price Index (PPI) data for the December quarter, which has registered a 0.2% quarterly increase in final (stage 3) prices and an increase of only 1.9% over the year:
The 0.2% increase in final (stage 3) prices was driven primarily by increases in the prices received for other agriculture (+11.1%), other transport equipment manufacturing (+3.2%) and building construction (+0.4%), partly offset by falls in the prices received for petroleum refining and petroleum fuel manufacturing (-5.5%), and computer and electronic equipment manufacturing (-2.5%).
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 appreciation of the Australian dollar, which could increase now that the dollar is depreciating:
Finally, the below chart compares annual changes in the final PPI against the Consumer Price Index (CPI):
According to Westpac:
The PPI does not suggest any acceleration in underlying inflationary pressures and is consistent with the building theme that Australia’s current modest lift in inflation is associated with one off events boosting ongoing administrative price inflation.
