Wednesday, October 27, 2010

Consumer Price Index

The latest figures from the Australian Bureau of Statisitcs show that inflationary pressures as measured by the CPI are relatively sedate. (The CPI is one measure of inflation - there is also the Producer Price Index)

Some pundits argue that this means that the RBA may be willing to hold off on a Melbourne Cup Day interest rate rise. The CPI figures came in at 0.7 per cent for the quarter and 2.8 per cent for the year

The RBA operates with an inflation target of between 2 and 3 per cent, but it gives greater credence to what is called underlying inflation. According to Michael Janda from ABC:
The Reserve Bank's preferred trimmed mean and weighted median measures of inflation came in at 0.6 and 0.5 per cent for the three months to September, virtually unchanged from the 0.5 per cent result for both last quarter.
That leaves underlying inflation running between 2.3 and 2.5 per cent for the year to September, depending which measure you look at.
What is interesting though is that key expenses for all of us have gone up - health, education and housing. Also not a great time to be a smoker or drinker, although food prices rises have been subdued.

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