Business responds to CPI rise

27 July 2011

The Consumer Price Index (CPI) increased in the June quarter, according to the State’s leading business membership organisation, Business SA.

Australian Bureau of Statistics (ABS) figures showed that the national CPI increased 0.9 per cent from the March 2011 quarter to the June 2011 quarter, for an annual rate of 3.6 per cent.

Adelaide’s CPI figures increased 1.0 per cent in the same quarter, for an annual rate of 3.9 per cent.

Business SA Chief Executive Officer, Peter Vaughan, said that while inflation increased, local businesses remained under pressure.

“While there was a rise in inflation in the June quarter, interest rates must remain on hold when the Reserve Bank meets next week,” Mr Vaughan said.

“Inflation has breached the upper end of the Reserve Bank’s target range, however this reflected the impact of the natural disasters, as well as higher oil prices.

“The Reserve Bank’s underlying measures of inflation are more subdued and we would expect the rate to decline over the next quarter.

“Rising petrol, water and electricity prices, along with increases in general costs, rates and levies, are all having a direct impact on confidence throughout the economy and this is maintaining pressure on local businesses.

“Decreasing vegetable, milk and computing equipment costs were not enough to offset the rise in fruit, fuel and furniture costs.

“We do not expect inflation to remain at these levels and the Reserve Bank must leave interest rates on hold to ease some of the strain on businesses throughout the State.”