PRICES


CONSUMER PRICE INDEX

Perth's Consumer Price Index (CPI) rose by 0.8% in the December quarter 2007, slightly up from the 0.6% recorded in the previous quarter. Nationally, prices rose 0.9% in the current period. A major contributor to Perth's slowing CPI growth was declining prices in pharmaceuticals, down 4.3% in the December quarter 2007. The fall in the net cost of pharmaceuticals is due to the cyclical effect of the Pharmaceutical Benefit Scheme (PBS) safety net. The number of people accessing the PBS Safety Net benefits peaked in the December quarter. Other significant price falls in Perth included fruit (down 11.8%) and vegetables (down 2.8%).

The main driver of Perth's CPI growth in December quarter 2007 was automotive fuel (up 4.8%). Other major contributors were rents (up 3.2%), domestic holiday travel and accommodation (up 5.1%) and overseas holiday travel and accommodation (up 3.5%). Prices also rose for deposit and loan facilities (up 2.6%).

Through the year to December quarter 2007, Perth's CPI increased by 3.0%, following a rise of 2.6% in the previous period. Perth's CPI growth equalled the national growth and was the third highest among Australian capital cities, behind Brisbane (3.9%) and Melbourne (3.3%). The main contributors to Perth's CPI growth during the year were rents (up 11.2%), house purchases (up 3.3%) and automotive fuel (up 13.4%). Partially offsetting these rises were declining prices in fruits (down 24.6%), child care (down 26.2%) and audio, visual and computing equipment (down 12.7%). The rate of CPI growth recorded nationally reached the top of the Reserve Bank of Australia's (RBA) medium-term target range for inflation of 3.0%, which influenced a decision by the RBA to increase official interest rates by 25 basis points to 6.5% in August 2007, 6.75% in November 2007 and 7.0% in February 2008.

WAGE PRICE INDEX

Western Australia's Wage Price Index (WPI) of total hourly rates of pay (excluding bonuses) for all sectors rose 1.3% in the December quarter 2007, following an increase of 1.8% the previous quarter. Private sector wage prices grew 1.3%, marginally higher than public sector wage prices at 1.2%. Western Australia's all sectors WPI growth for the quarter is the highest wage price growth amongst the states and territories and exceeded the Australian WPI growth of 1.0%.

Through the year to December quarter 2007, Western Australia all sectors recorded the highest WPI growth (5.9%) since the series began in September quarter 1997. This increase was considerably higher than other states and territories, with South Australia showing the next highest increase of 4.9%. At the Australia level, the WPI increased by 4.2% through the year to December quarter 2007. Australia level all sectors and private sector wage price growth, through the year to December quarter 2007, is higher than public sector growth for the first time in five years.

In Western Australia, wage price growth was strongest in the Construction (7.8%), Manufacturing (7.5%) and Personal and other services (7.1%) industries, while Education (4.4%) and Health and community services (4.4%) industries both showed the least growth. In the occupation categories, wage prices for Tradespersons and related workers (9.0%), Intermediate production and transport workers (7.0%) and Labourers and related workers (6.6%) showed strong growth.