The Australian Bureau of Statistics (ABS) today released Producer Price Index (PPI) data for the March quarter, which has registered a large 0.9% quarterly increase in final (stage 3) prices, with prices also up 2.5% over the year:
The 0.9% increase in final (stage 3) prices was driven primarily by increases in petroleum costs (+7.6%), other agriculture (+7.8%) and bakery product manufacturing (+7.7%), partly offset by falls in the prices received for pharmaceutical and medicinal product manufacturing (-4.6%).
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:
Finally, the below chart compares annual changes in the final PPI against the Consumer Price Index (CPI):
While the PPI accelerated in the March quarter, inflationary pressures in the Australian economy remain in-check, tracking within the RBA’s target band. The outlook looks fairly benign also, with the potential for rising tradable inflation (assuming the Australian dollar resumes falling) likely to be offset by a weakening domestic economy, with rising unemployment and excess capacity.
