At 0.9% for the March quarter, 2.9% for the full year, the Consumer Price Index figures released today by the Australian Bureau of statistics were a little higher than forecasters had expected.
One thing that interested me was the difference in price performance between the traded and non-traded sectors.
The tradable component where prices are largely set on the world market makes up around 42% of the CPI basket. Prices here rose by 0.2% in the March quarter, up 1.1% over the year. This compares to 1.4% in the year ending in the December quarter 2009.
By contrast, the non-tradable component (58% of the CPI basket) rose by 1.5% in the March quarter, up 4.2% over the year. The equivalent figure for the year ending in the December quarter 2009 was 2.6%.
As you might expect given Australia's relatively good growth, the price pressures are presently on the non-traded side. This can be expected to continue.
Leaving aside issues associated with the definition of core inflation, the CPI is now very close to the Australian Reserve Bank's target range of 2-3%, above it in some capital cities and in non-tradable goods.
The Bank may or may not raise interest rates at its next meeting, but the raw numbers do suggest that Australia is facing inflationary pressures. The real sleeper is the tradable side since world economic growth is accelerating.