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).

HOUSING (+1.5%)

All categories of housing recorded price rises this quarter, with the most significant being electricity (+5.9%), house purchase (+1.2%), rents (+1.0%) and gas and other household fuels (+3.6%).

Electricity prices rose mainly due to tariff increases in Melbourne and peak period pricing in Adelaide.

Over the twelve months to March quarter 2010, the housing group increased 6.1% mainly due to rises in electricity (+18.2%), house purchase (+4.1%), rents (+4.6%) and water and sewerage (+14.0%).


HEALTH (+4.7%)

The major contributor to the increase in health costs this quarter was pharmaceuticals (+13.3%), with smaller contributions from hospital and medical services (+2.9%) and dental services (+1.6%).

Pharmaceuticals prices rose as a result of the cyclical reduction in the proportion of consumers who qualify for subsidised medications under the Pharmaceuticals Benefit Scheme at the start of each calendar year.

The rise in the net cost of hospital and medical services was mainly due to the cyclical reduction in the proportion of consumers who qualify for subsidies for out-of-hospital medical expenses under the Medicare Plus safety net at the start of each calendar year.

Over the twelve months to March quarter 2010, the health group rose 5.1% due to increases in hospital and medical services (+6.5%), dental services (+3.9%) and pharmaceuticals (+1.9%).


FINANCIAL AND INSURANCE SERVICES (+2.0%)

The major contributors to the increase in financial and insurance services this quarter were deposit and loan facilities (+3.4%), insurance services (+1.6%) and other financial services (+0.8%).

There was a rise in the price of services charged by financial institutions including services where prices are principally derived from interest-rate margins.

Over the twelve months to March quarter 2010, the financial and insurance services group recorded an increase of 2.0%. This increase was due to rises for insurance services (+7.1%) and deposit and loan facilities (+1.9%). This was partially offset by a fall for other financial services (-0.3%).


FOOD (+1.1%)

The food group rose 1.1% in the March quarter 2010. The most significant contributors were vegetables (+10.3%), soft drinks, waters and juices (+3.5%), and take away and fast foods (+0.7%).

The rise in vegetables is a result of seasonal factors and adverse weather conditions in some growing areas, which resulted in short supplies for a number of vegetables. Fruit (-5.7%) provided the most significant offset due to more favourable growing conditions in fruit growing regions.

Over the twelve months to March quarter 2010, the food group rose 0.7%. Increases were mainly driven by general price rises in take away and fast foods (+2.9%), restaurant meals (+2.9%), soft drinks, waters and juices (+3.1%) and snacks and confectionery (+1.7%). Fruit (-4.6%) and milk (-3.2%) recorded the most significant offsets.


TRANSPORTATION (+1.3%)

The main contributor to the increase in transportation costs this quarter was the rise in the price of automotive fuel (+4.2%). Urban transport fares (+3.2%), other motoring charges (+0.8%) and motor vehicle repair and servicing (+0.1%) also recorded increases. Motor vehicles (-0.6%) recorded the main offset.

Automotive fuel fell in October (-3.5%), rose in November (+1.6%), December (+0.4%), and January (+3.6%), fell in February (-2.5%) and rose in March (+4.6%).

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 March quarter 2010, the transportation group rose 4.1%, with the main contributor being automotive fuel (+9.1%). Other motoring charges (+6.2%), motor vehicle repair and servicing (+2.2%), urban transport fares (+4.2%), motor vehicle parts and accessories (+2.1%) and motor vehicles (+0.4%) also rose.


EDUCATION (+5.6%)

The education group reported a rise in the March quarter 2010, with the commencement of the new school year. Increases in tertiary education (+5.9%), secondary education (+5.7%) and preschool and primary education (+4.5%) drove this movement.

Over the twelve months to March quarter 2010, the education group rose 5.7%.


CLOTHING AND FOOTWEAR (-4.3%)

The fall in clothing and footwear this quarter was due to decreases in men's outerwear (-6.7%), children's and infants' clothing (-9.9%) and women's outerwear (-3.7%), which were impacted by post Christmas sales. In addition, the general rate of customs duty on textile, clothing and footwear imports was cut from 17.5% to 10.0% on 1 January 2010.

Over the twelve months to March quarter 2010, the clothing and footwear group fell 1.8%. The decrease was mainly due to falls in women's outerwear (-4.4%), men's outerwear (-3.7%) and children's and infants' clothing (-4.9%). Women's underwear, nightwear and hosiery (+5.1%) recorded the largest offset.


HOUSEHOLD CONTENTS AND SERVICES (-1.3%)

Household contents and services fell 1.3% this quarter with decreases in furniture (-4.6%), glassware, tableware and household utensils (-6.7%) and towels and linen (-7.0%). Household cleaning agents (+3.3%) and child care (+3.0%) provided the largest offsets.

Over the twelve months to March quarter 2010, the household contents and services group rose 1.4%. This increase was predominantly due to rises in other household supplies (+2.0%) and other household services (+3.9%).


RECREATION (-1.0%)

The major contributors to the decrease in recreation this quarter were domestic holiday travel and accommodation (-2.3%), audio, visual and computing equipment (-5.9%) and audio, visual and computing media and services (-1.3%).

Over the twelve months to March quarter 2010, the recreation group recorded an increase of 1.2%. This increase was due to rises for domestic holiday travel and accommodation (+5.2%), pets, pet foods and supplies (+13.5%), other recreational activities (+4.1%) and sports participation (+3.8%).


ALCOHOL AND TOBACCO (+1.3%)

Alcohol and tobacco recorded a rise of 1.3% with increases in tobacco (+2.1%), beer (+1.2%) and spirits (+0.6%) partially due to the effects of the federal excise tax increase from 1 February 2010.

Over the 12 months to March quarter 2010, the alcohol and tobacco group rose 3.5%.


COMMUNICATION (-0.1%)

The fall in the communication group this quarter was due to decreases in the cost of telecommunication (-0.1%).

Over the twelve months to March quarter 2010, the communication group rose 0.2%.


TRADABLES AND NON-TRADABLES

The tradables component (see table 8) of the All groups CPI rose 0.2% in the March quarter 2010. 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 increase in the tradable goods component of 0.2% was driven by rises in automotive fuel, pharmaceuticals, vegetables and tobacco. The most significant offsetting decreases in tradable goods were in furniture, fruit, audio, visual and computing equipment and men's outerwear. The decrease in the tradable services component of 0.2% was driven by overseas holiday travel and accommodation.

The non-tradables component of the All groups CPI rose 1.5% in the March quarter 2010. 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. The non-tradable goods component rose 1.5% mainly due to price increases for electricity, house purchase, gas and other household fuels and beer. The most significant offsetting movements were for poultry and eggs. The non-tradables services component rose 1.3%, due to deposit and loan facilities, hospital and medical services, tertiary education, secondary education and rents. The most significant offsetting decrease was for domestic holiday travel and accommodation.

Through the year to March quarter 2010, tradables rose 1.1% and non-tradables rose 4.2%. This compares with tradables rising 1.4% and non-tradables rising 2.6% through the year to December quarter 2009. The main increases in tradables were automotive fuel, tobacco, pets, pet food and supplies and spirits. Decreases in tradables were recorded for audio, visual and computing equipment, fruit, women's outerwear and men's outerwear. Electricity, house purchase, rents, hospital and medical services, water and sewerage, beer, insurance services, domestic holiday travel and accommodation and tertiary education were the main contributors to the rise in non-tradables. The largest offsetting decreases in non-tradables were for milk and poultry.