Weakness in the Australian dollar during the June quarter is behind a rise in the producer price index (PPI), economists say.

Australia’s PPI at the final stage of production rose 0.5 per cent in the three months to June, for an annual rise of 1.1 per cent.

This compares with an unrevised 0.3 per cent fall in the March quarter.

Economists had expected a 0.3 per cent rise in the June quarter.

St George economist Janu Chan said specific price data revealed the Australian dollar’s impact on the PPI.

“The breakdown was unsurprising given that we had the Aussie dollar fall in the quarter,” she said.

“So, we had a stronger rise in import prices, but domestic prices remained quite subdued.”

The trend would likely produce a rise in the consumer price index (CPI), due for release on Wednesday, which in turn could prompt the Reserve Bank of Australia (RBA) to keep the cash rate on hold at its August meeting.

JP Morgan economist Ben Jarman said the June quarter PPI was a turn-around from the fall in producer prices in the March quarter.

“In terms of the broad strokes of this report, there isn’t much new, we knew that from last week’s import price data that fuel costs were up a bit,” Mr Jarman said.

“You had a fair bit of strength coming from clothing prices and domestically we’ve added some strength in agriculture prices.”

The producer price index is the measure of prices at the factory or farm gate before transport and other costs are added to it, and it is often a pointer to the what the consumer price index (CPI) will be.

Mr Jarman said PPI should not cause JP Morgan to change its forecast for the June quarter CPI, to be released on Wednesday.

“We think you’ll see something around the 0.6 per cent mark for both core and headline inflation,” he said.

“That’s going to put the RBA (Reserve Bank of Australia) in a pretty balanced position as we look towards the next board meeting.”