The Consumer Price Index increased 0.1% in the March quarter 2012, strengthening the case for a rate cut.
The most significant price rises in the March quarter 2012 were for pharmaceutical products (+14.1%), secondary education (+7.7%), automotive fuel (+2.5%), medical and hospital services (+2.1%), tertiary education (+4.7%) and rents (+1.0%).
The most significant offsetting price falls were for fruit (–30.0%), international holiday travel and accommodation (–4.8%), furniture (–6.0%), audio, visual and computing equipment (–6.3%) and domestic holiday travel and accommodation (–2.0%).
The CPI rose 1.6% through the year to the March quarter 2012, compared with a rise of 3.1% through the year to the December quarter 2011.
The “benign” inflation figures strongly support the Reserve Bank of Australia cutting the cash rate when it meets next Tuesday, according to the Real Estate Institute of Queensland.
Anton Kardash, chief executive of the REIQ said today’s inflation result was a further sign that the economy is in need of an immediate pick-me-up.
Most economists had forecasted an underlying inflation figure for the March quarter of about 0.6 per cent. In fact, many believed that anything less than 0.8 per cent could result in a rate reduction next week.
Coles records sales growth
Coles has posted a lift in food and liquor store sales with owner Wesfarmers saying the supermarket is well placed for trading in the final quarter despite record price deflation.
For the third quarter, Coles posted comparable food and liquor store sales growth of 2.7%, taking full-year growth to date to 3.9%, the company said in a statement.
The numbers follow similar third quarter results last week from which reported flat comparable store sales at 3.3% despite growth in customer numbers and units sold.
Sharemarket slips on opening
The Australian market opened slightly lower following falls on major international markets on the back of disappointing Eurozone and US earnings results.
At the market opening, the benchmark S&P/ASX 200 index edged down 0.15% to 4,345.7 points and the broader All Ordinaries Index fell 0.19% lower to 4,421.8 points.
The resources sector led the market lower, with the major miners losing ground.
Manufacturing index falls into negative
The NAB Manufacturing Activity Index eased marginally in March, down to slightly negative levels to -0.4 points.
The index implies a modest decline in quarter-on-quarter growth in the manufacturing sector which remains impacted by global uncertainty and the strong dollar.
The index recorded significant divergence between sectors – with wood, food and printing weaker, while metals were stronger.