A sharp rise in utility costs in the September quarter Producer Price data from the Australian Bureau of Statistics yesterday will concentrate the minds in the Reserve Bank ahead of the release of the consumer inflation figures for the same quarter tomorrow.
Although the PPI and CPI are not strictly comparable, there were enough hints in the producer figures to confirm that RBA unease about surging utility prices and other price rises, are going to impact the CPI
.
The final stage PPI, the key figure, rose 1.3% in the three months to September, the biggest quarterly rise since the December 2008 quarter (1.3% also).
The ABS said the final stage producer price index for the year to September rose 2.2% from a year earlier, substantially faster than in the previous four quarters. It was the strongest quarter since the three months to March 2009 (4.0%).
In fact the final stage PPI was up just 0.3% in the June quarter and 1% for the year, while in the March quarter the rise was a 1.0% and minus 0.1%.
In the December 2009 quarter the quarterly movement was down 0.4% and the figure for calendar 2009 was minus 1.5%.
The ABS said PPI for intermediate goods prices rose 1.1% from the previous quarter and 2.4% from a year earlier, while preliminary-stage commodities were up 1.2% quarter-on-quarter and 2.9% year-on-year, the bureau said.
Rises in utility prices usually peak in the September quarter because state-based pricing tribunals allow price rises to start for power, water and other providers from July 1, the start of the new financial and budget years.
The September quarter of 2009 saw a 12.1% rise in utility costs (the final stage PPI was up just 0.1% for the three months and 0.2% for the year to September).
This year saw a rise of 8.9% for utility costs.
In the first nine months (three quarters) of 2010, the final stage PPI has risen at an annual rate of 3.5%, and within the index, the PPI for final consumer goods and services rose by 1.8% in the quarter, the biggest rise for two years.
For the year to September, the increase in the final consumer component of the PPI was 2.9%, while the annualised rate for the three quarters so far in 2010 was 4.8%.
The sharp rise in the value of the Aussie dollar, which clipped price pressures in the last nine months of 2009, doesn’t seem to have had the same sort of impact this year, despite some dramatic headline increases to parity with the $US.
The imported component of the consumer subset of PPI has risen in each of the first three quarters of 2010.
So far this year, both the imported and domestic components of the final consumer PPI have risen at a pace faster than the RBA’s target range. That will cause concern.
