Swan hails CPI

Wayne Swan is hailing new figures, showing that Australia’s inflation rate has fallen to 1.2 per cent, describing them as further evidence of the economy’s “rock-solid fundamentals”

The Federal Treasurer said these figures have come with lower interest rates and low unemployment.

He said all this would benefit families “at a time when there’s volatility elsewhere in the world”.

Speaking to reporters in Sydney, Mr Swan also said the media is more interested in reporting doom and gloom predictions, than good economic news.

He criticised the major television networks for overlooking Reserve Bank governor Glenn Steven’s speech to the Anika Foundation on Tuesday.

In that speech, Mr Stevens described the Australian economy as a “glass half full”.

The Bureau of Statistics reported today that its consumer price index rose by 0.5 per cent in the June quarter, after a rise of just 0.1 per cent in the March quarter.

That took Australia’s headline inflation rate for the year to 1.2 per cent,  an exceptionally low figure, by traditional standards.

However, it is Australia’s underlying inflation rates that the Reserve Bank board will study, when it meets next month to review its interest rate settings.

These are close to the Statistician’s weighted median, which the bureau puts at 0.7  per cent for the June quarter and 1.9 per cent for the year to the end of June.

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

Naturally the RBA will  also have many other things to consider, as well, when its board meets on the in August.

These include the state of the world economy, and European debt issues.

However, Australia’s builders say the latest CPI figures show that the RBA now has plenty of room to cut rates again.

The Housing Industry Association says the bank should now “go for growth.”

The Bureau said the main price rises, in the June quarter, had been for medical and hospital services, which rose by 2.8 per cent, and rents, which rose by 1.1 per cent.

It said vegetable prices had risen by 5.2 per cent and furniture prices rose by 4.5 per cent in the quarter.

However the price of domestic holiday travel and accommodation had fallen by 4 per cent in the same time, while the price of audio visual equipment fell by 3.8 per cent and the price of cakes and biscuits dropped by 2.8 per cent.