Consumer prices rose in March on the back of holiday expenses, alcohol and fuel – and despite falls in meats, housing and clothes.
The TD Securities-Melbourne Institute inflation gauge rose 0.5 per cent in March, following an increase of 0.1 per cent in February, the survey, published on Monday, showed.
In the year to March, the inflation gauge rose 1.8 per cent – the lowest annual inflation rate for two years and falling just shy of the Reserve Bank of Australia’s (RBA) two to three per cent inflation target band for the medium term.
The main contributors to the month’s rise were holiday travel and accommodation, alcohol and tobacco, and automotive fuel.
This was offset by drops in meat and seafood, housing, and clothes and footwear.
The core inflation measure, which excludes volatile items such as automotive fuel and fruit and vegetables, rose by 0.4 per cent in March, and was up 2.4 per cent from a year ago.
TD Securities head of Asia-Pacific Research Annette Beacher said the report indicated an overall decline in inflation rates, with previous rises accounted for by seasonality.
“With this March report we have finalised our CPI forecasts for the March quarter,” she said.
“It is clear that while prices were sticky in the first few months of 2012, much of this can be accounted for by seasonality. Hence annual inflation rates are expected to continue to decelerate.
“We forecast headline inflation to increase by 0.7 per cent, to be 2.2 per cent higher than a year ago, the lowest annual outcome since December quarter 2009.”
Ms Beacher said the figures did not suggest the RBA needed to cut the official interest rate when it meets on Tuesday.
“We forecast underlying inflation to increase by 0.5 per cent in the quarter, but this lowers the annual rate from 2.6 per cent to 2.3 per cent,” she said.
“While expectations for a near-term rate cut have been re-ignited, we cannot identify clear triggers for the RBA to recommend a rate cut tomorrow, as lower inflation, lingering global risks and contractionary fiscal policy are slow-burn issues, not smoking guns.”
