Australia’s inflation jumps

Soaring house prices helped to push Australia’s headline inflation rate to 2.9 per cent over the past year.

The Australian Bureau of Statistics reported today that the nation’s consumer price index rose by 0.9 per cent in the March quarter.

This was well above the 0.5 per cent rise in the December quarter, which  left Australia with a 2.1 per cent annual inflation rate at the end of last year.

However, the bureau also reported today that Australia’s underlying inflation rate, on a weighted median basis, fell from a revised 3.5 per cent last year to 3.1 per cent now.

The Reserve Bank aims to keep Australia’s underlying inflation rate within a 2-3 per cent annual range, over the course of a business cycle.

It has warned that Australians can’t expect  interest rates stay below normal levels, where they have been since the global economic crisis struck, late in 2008.

Its  current marker rate, at 4.25 per cent, is still below the 4.5 to 5 per cent range most economists regard as normal.

The bank’s board will meet again, to review rates, on the first Tuesday in May.

The bureau’s figures show that housing prices rose by 1.5 per cent in the March quarter and 6.1 per cent in the 12 months to the end of March.

This was the biggest price rise Australians have faced, over the past year.

However education costs have risen sharply, too. They leapt by 5.6 per cent in the March quarter, at the start of the new scholastic year, and by 5.7 per cent in the 12 months to the end of March.

The bureau also reported that health costs have been rising sharply, jumping by 4.7 per cent in the March quarter and 5.1 per cent over the year.

The price of pharmaceuticals, alone, leapt by 13.3 per cent in the March quarter.