Small inflation increase over 2018's first quarter

Small inflation increase over 2018's first quarter

Back to school costs and rising wholesale gas prices are among the factors that have impacted Australian household budgets over the first quarter of 2018, though inflation rose relatively little, according to the latest data from the Australian Bureau of Statistics (ABS).

The nation’s Consumer Price Index (CPI) rose 0.4% in the March 2018 quarter; a slightly lower increase than the 0.6% rise recorded in the preceding December 2017 quarter. On a year on year basis, CPI rose 1.9%, remaining steady with the year on year increase recorded in the December 2017 quarter.

What is CPI, and how is it used?

According to the ABS, a Consumer Price Index, or CPI, is a measure of the average change over time in the prices paid by households for a fixed basket of goods and services.

CPI is primarily used as a macro-economic indicator by the government and economists to monitor and evaluate levels of inflation in the Australian economy, and for adjusting dollar values of types of fixed payments, such as pensions and contracts.

For example, CPI is understood to be a consideration when the Reverse Bank of Australia (RBA) meets to decide whether to raise or lower the nation’s cash rate

Quarterly price rises
  • Food and non-alcoholic beverages: +0.5%
  • Alcohol and tobacco: +0.7%
  • Housing: +0.7%
  • Health: +2.2%
  • Transport: +1.1%
  • Education: +2.6%
  • Insurance and financial services: +0.3%
  • International non-tradeables: +0.8%
Quarterly price falls
  • Clothing and footwear: -2.0%
  • Furnishings, household equipment and services: -0.4%
  • Communication: -0.4%
  • Recreation and culture: -0.7%
  • International tradeables: -0.4%

Rises and falls

Factors contributing to increases this quarter included:

  • Secondary education (+3.3%)
  • Gas and other household fuels (+6.0%)
  • Pharmaceutical products (+5.6%)
  • Vegetables (+3.7%)
  • Medical and hospital services (+1.5%).

Meanwhile, there were falls in:

  • International holiday travel and accommodation (-2.4%)
  • Audio, visual and computing media and services (-6.1%)
  • Furniture (-2.8%)

Some of the rising costs this quarter can be attributed to:

  • The start of the new school year (Education)
  • Rising wholesale prices for gas and electricity (Household fuels)
  • The cyclical reduction in the proportion of consumers who qualify for subsidies under the Pharmaceutical Benefits Scheme (PBS) and Medicare Benefits Scheme (MBS) (Pharmaceutical products and hospital services)
  • Adverse weather conditions in major growing areas (Vegetables)

Some of the falling costs this quarter can be attributed to:

  • Winter off-peak seasons in Europe and America (International holiday travel and accommodation)
  • Ongoing competition and continued discounting activity in the retail industry (Furniture)

CPI for the capitals

On a state by state basis, seven out of Australia’s eight capital cities experienced increases in CPI over the March 2018 quarter, with the exception of Darwin, which stayed flat.

ABS chief economist, Bruce Hockman, said that while several of the east coast cities experienced annual inflation higher than 2%, softer economic conditions in Darwin and Perth saw subdued annual inflation of 1.1% and 0.9% respectively.

Capital city CPI Mar Qtr 2018 Change from last quarter Change from last year
Sydney 113.6 0.3% 2.1%
Melbourne 113.3 0.9% 2.2%
Brisbane 112.4 0.1% 1.7%
Adelaide 111.6 0.4% 2.3%
Perth 110.0 0.1% 0.9%
Hobart 111.1 0.7% 2.0%
Darwin 109.7 0.0 1.1%
Canberra 111.2 0.8% 2.4%
Weighted average of all capitals 112.6 0.4 1.9%

Source: ABS

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Learn more about bank accounts

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This is why it’s important to give true and matching information to all government agencies.

For example, if you report to Centrelink your annual income is $25,000, but at tax time you report your income as $50,000 with the ATO, it’s likely you’ll be ‘red flagged’.

At this point, Centrelink can legally request that your bank hand over your personal bank account details, to review your finances.

In most cases, Centrelink does not have the authority to take money out of your account. You will usually be given written notice to repay the debt.

However, Centrelink can also reduce your benefits until you’ve paid back what you owe. In extreme cases, Centrelink can garnish your wages and assets (including money in your bank account) until your debt is repaid.

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Here’s a handy checklist of items to tick off, so the job gets done quicker. If you don’t do your banking online, the following steps can also be done at a branch.   

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Before you can open your child an account, you’ll need to have a birth certificate or passport for your baby.

As the parent or guardian, you’ll also be listed as a joint holder on the account. This means you’ll need to have proof of your identification and address (a driver’s licence, passport, birth certificate or Medicare Card).

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A comparison site like RateCity can help you work out what bank account product matches your needs.

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The good news for savvy young folks like you wanting to take charge of your finances is that there are many bank accounts available for under-18s.

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