MAIN CONTRIBUTORS TO CHANGE


CPI GROUPS

The discussion of the CPI groups below is ordered in terms of their absolute significance to the change in All groups index points for the quarter (see tables 6 and 7).

TRANSPORTATION (-6.9%)

The decrease in transportation costs this quarter was mainly due to the fall in the price of automotive fuel (-18.2%), with a smaller contribution from a fall in prices of motor vehicles (-2.4%). All other categories in transportation rose, with motor vehicle repair and servicing increasing by 0.9%, motor vehicle parts and accessories by 2.0%, other motoring charges by 0.6% and urban transport fares by 0.5%.

Automotive fuel prices rose in July (+0.3%), fell in August (-6.7%), rose again in September (+1.1%), then fell in October (-1.7%), November (-17.4%) and December (-13.5%).

The following graph shows the pattern of the average daily prices for unleaded petrol for the eight capital cities over the last fifteen months.

Over the twelve months to December quarter 2008, the transportation group fell 1.2% with the main contributors being automotive fuel (-4.4%) and motor vehicles (-3.5%). Motor vehicle repair and servicing (+3.7%), other motoring charges (+4.9%), motor vehicle parts and accessories (+6.0%) and urban transport fares (+3.3%) provided some offsetting increases.


FOOD (+2.0%)

Food prices rose in all capital cities, with increases in almost all categories this quarter. The most significant contributors to the increase were fruit (+8.0%), take away and fast foods (+1.5%) and vegetables (+3.3%). Seasonal factors and limited supply were contributing factors to price rises in both fruit and vegetables, with widespread price rises and the cessation of specials.

The rise in fruit prices was primarily due to increases in prices for stone fruit, with smaller contributions from citrus fruit and apples and pears.

Through the year to December quarter 2008, the food group rose 5.6%, with strong positive movements in all capital cities. The increase was predominantly due to rises in take away and fast foods (+7.0%), restaurant meals (+4.4%), cakes and biscuits (+9.4%) and bread (+8.2%).


HOUSING (+0.7%)

Most categories of housing recorded price rises this quarter with rents (+1.8%) and house repairs and maintenance (+1.2%) being the main contributors. The only offsetting price fall was in gas and other household fuels (-0.6%).

Rents rose in every capital city, ranging from 1.3% in Hobart to 3.4% in Darwin. House repairs and maintenance rose in all cities except Hobart (-0.3%).

Prices for gas and other household fuels fell in five cities due to a combination of seasonal pricing and the drop in world oil prices. The strongest fall was in Hobart (-1.8%), while Darwin showed an increase of 1.9%.

Through the year to December quarter 2008, the housing group rose 6.5% mainly due to rises in rents (+8.4%), house purchase (+4.3%) and electricity (+10.2%).


ALCOHOL AND TOBACCO (+1.4%)

The alcohol and tobacco group recorded a rise of 1.4% in the December quarter 2008. All components in the alcohol and tobacco group rose this quarter, with price increases in tobacco (+1.7%), beer (+1.8%), spirits (+1.4%) and wine (+0.2%).

The rises in tobacco, beer, spirits and wine were mainly due to widespread general price increases and the cessation of specials in some cities.

Through the year to December quarter 2008, the alcohol and tobacco group rose 5.8%, mainly due to rises in tobacco (+5.5%), spirits (+13.9%) and beer (+4.8%).


RECREATION (+0.5%)

The rise in recreation this quarter was mainly due to increased prices for domestic holiday travel and accommodation (+1.7%) and overseas holiday travel and accommodation (+1.6%). The major offsets were provided by audio, visual, media and services (-2.8%) and audio, visual and computing equipment (-3.0%).

The rise in domestic holiday travel and accommodation was driven mainly by widespread seasonal price rises for all categories of accommodation.

Through the year to December quarter 2008, the recreation group rose 1.3%. This rise was mainly due to overseas holiday travel and accommodation (+8.4%) and other recreational activities (+7.1%). Audio, visual and computing equipment (-13.8%) provided the major offset.


HEALTH (-1.2%)

The major contributor to the fall in the health costs was pharmaceuticals (-4.7%), with a less significant decrease for hospital and medical services (-0.4%). This is the strongest negative movement for health since the March quarter 1999. Dental services (+0.8%) provided the only offsetting increase.

The fall in net prices of pharmaceuticals was due to the cyclical effect of the Pharmaceutical Benefits Scheme (PBS) safety net. The number of people accessing the PBS safety net benefits reaches a peak in the December quarter 2008. All capital cities saw significant falls due to the fall in the "out-of-pocket" cost of PBS prescription pharmaceuticals.

The fall in the net cost of hospital and medical services was due to the cyclical effect of the Medicare Plus safety net and the Medicare Rebate.

Through the year to December quarter 2008, the health group rose 4.9% due to increases in hospital and medical services (+6.1%), dental services (+4.4%) and pharmaceuticals (+2.7%).


HOUSEHOLD CONTENTS AND SERVICES (+0.3%)

Most categories of the household contents and services group recorded rises this quarter, with the most significant being other household supplies (+1.1%) and floor and window coverings (+1.4%). The largest offsetting price fall was in toiletries and personal care products (-0.6%).

The rise in other household supplies was due to price increases and discontinuation of specials in most cites.

Through the year to December quarter 2008, the household contents and services group rose 0.4%, with positive movements in five of the capital cities. The increase was predominantly due to rises in other household supplies (+4.5%) and other household services (+6.2%). Child care (-17.3%) recorded the largest annual negative movement due to the increase to the Child Care Tax Rebate implemented in September quarter 2008.


FINANCIAL AND INSURANCE SERVICES (-0.3%)

The major contributor to the fall in financial and insurance services this quarter was deposit and loan facilities (-1.9%). Other financial services (+1.1%) and insurance services (+1.7%) provided offsetting increases.

Through the year to December quarter 2008, financial and insurance services rose 7.0% due mainly to increases in the prices of deposit and loan facilities and insurance services.


CLOTHING AND FOOTWEAR (+0.4%)

The rise in clothing and footwear prices this quarter was mainly due to rises in men's outerwear (+1.3%). Women's outerwear (-1.6%) provided the major offsetting decrease, with falls in all capital cities driven by early specials on summer stock during the pre-Christmas sales period.

Through the year to December quarter 2008, the clothing and footwear index rose 0.2%.


COMMUNICATION (+0.4%)

The rise in communication costs in the December quarter 2008 was due to increases in the cost of telecommunication (+0.3%) and postal services (+3.6%).

Through the year to December quarter 2008, the cost of communication rose 0.5%.


TRADABLES AND NON-TRADABLES

The tradables component (see table 8) of the All groups CPI fell 1.8% in the December quarter 2008. Prices for the goods and services in this component are largely determined on the world market. The tradables component represents approximately 42% of the weight of the CPI. The fall in the tradable goods component was driven by decreases in automotive fuel, motor vehicles and pharmaceuticals. The most significant offsetting rises were in fruit, tobacco and vegetables. The only tradable services component, overseas holiday travel and accommodation, rose 1.6%.

The non-tradables component of the All groups CPI rose 0.6% in the December quarter 2008. Prices for the goods and services in this component are largely determined by domestic price pressures. The non-tradables component represents approximately 58% of the CPI. Within non-tradables, the services component rose 0.5%, mainly due to rents, domestic holiday travel and accommodation and other financial services. The only significant offset was provided by deposit and loan facilities. The non-tradable goods component rose 0.8% mainly due to price increases for take away and fast foods and beer.

Through the year to December quarter 2008, non-tradables rose 5.4% and tradables rose 1.2%. This compares with rises of 6.1% and 3.4%, respectively, for these components through the year to September quarter 2008. The main drivers in non-tradables were deposit and loan facilities, rents and house purchase. Overseas holiday travel and accommodation, tobacco and spirits were the main contributors to the rise in tradables with the decrease in automotive fuel offering a partial offset.