Australian Inflation Rises 0.5%

Australia's inflation rate picked up in the December quarter as food prices rose, adding to the likelihood of a rate hike., Bloomberg 1/26/2010 10:47:44 PM

he consumer price index climbed 0.5 percent in the fourth quarter from the previous three months, when it gained 1 percent, the Bureau of Statistics said in Sydney.

Inflation on an annual basis rose 2.1 per cent, also slightly more than the 2 per cent pace expected by analysts. The December quarter figures compare with a 1 percent quarter-on-quarter rise in the July-September period, when prices rose at a 1.3 per cent annual clip.

Among sectors, fruit prices jumped 15.9 per cent for the quarter, the ABS said. Domestic travel and accommodation rose 6.6 per cent. The cost of beer rose 2.1 per cent, while home purchases and rent rose 1 per cent each.

Offsetting those price increases were petrol, down 2.8 per cent, and pharmaceuticals down 5.3 per cent. Computers and electronics prices dropped 7.1 per cent in the quarter, ABS said.

Rising prices increase pressure on central bank Governor Glenn Stevens to boost the benchmark lending rate this quarter after he became the only policy maker in the world to raise borrowing costs three times last year. Figures published this month show confidence is surging amid the biggest hiring boom in more than three years, stoking pressure on inflation, which the bank aims to keep between 2 percent and 3 percent.

Australian Inflation Rises 0.5%