Australian Quarterly Inflation Slows to 0.7%


Australian inflation slowed in the third quarter because fuel and childcare costs fell and the currency's surge made imports of electrical goods cheaper.

The consumer price index advanced 0.7 percent from the second quarter, when it rose 1.2 percent, the Bureau of Statistics said in Sydney today.

Inflation may accelerate after the price of crude oil soared to a record this month, consumer spending picked up and the jobless rate dropped to a 33-year low. Economies from France to China are reporting increased price pressures as the cost of food and raw materials surge worldwide.

The Australian dollar rose to 90.31 U.S. cents at 11:36 a.m. in Sydney from 89.95 cents immediately before the report because of the core-inflation measures. The yield on the benchmark 10-year government bond rose 3 basis points to 6.16 percent. A basis point is 0.01 percentage point.

Most economists expect the Reserve Bank of Australia will raise interest rates again by March to cool price and wage increases in an economy in its 16th year of expansion.

``Inflation isn't out of control yet, but is strong enough to prompt another rate rise,'' Walters said.

Cooling headline inflation, fuel costs fell 3.7 percent in the third quarter and electrical goods dropped 2.5 percent. Childcare costs slumped 33.4 percent because of a government childcare tax rebate that subtracted 0.2 percentage points from the consumer price index. By contrast, food prices rose 1.9 percent and housing costs climbed 1.8 percent.

 


Bloomberg
10/23/2007 7:04:54 PM