Consumer Price Index– June Quarter 2014

Consumer prices rose by 0.5 per cent in the June quarter, according to the Consumer Price Index (CPI) released by the Australian Bureau of Statistics this morning.

The June quarter outcome indicates that price growth has moderated in the first half of 2014.

The 0.5 per cent rise in the CPI in the June quarter 2014 followed a rise of 0.6 per cent in the March quarter 2013.

Headline inflation was 3.0 per cent through the year, following 2.9 per cent growth through the year to the March quarter, largely due to the stronger inflation that was seen in the second half of 2013.

Underlying measures of inflation picked up in the June quarter, but are consistent with a moderation in underlying inflation after the second half of 2013.

The CPI trimmed mean rose by 0.8 per cent, while the weighted median rose by 0.6 per cent, after both rose 0.6 per cent in the March quarter.

Through the year to the June quarter, trimmed mean inflation was 2.9 per cent while weighted median inflation was 2.7 per cent.

The June quarter will be the last quarter before the removal of the carbon tax affects prices.

While the carbon tax was in place electricity prices rose by 23.3 per cent.

Treasury estimates show that the abolition of the carbon tax will reduce CPI by around 0.7 percentage points through the year to the June quarter of 2015.

Under new powers passed by the parliament last week, the Australian Competition and Consumer Commission will ensure that energy retailers pass the savings from the repeal of the carbon tax to their customers.

The major contributors to inflation in the June quarter were increases in medical dental and hospital services, new dwelling purchase by owner-occupiers, international holiday travel and accommodation, and tobacco. These rises were partially offset by lower prices for domestic holiday travel and accommodation, automotive fuel, and telecommunication equipment and services.