Business responds to CPI rise

27 April 2011

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

Australian Bureau of Statistics (ABS) figures showed that the national CPI increased 1.6 per cent from the December 2010 quarter to the March 2011 quarter, for an annual rate of 3.3 per cent.

Adelaide’s CPI figures increased 1.6 per cent in the same quarter, for an annual rate of 3.6 per cent.

Business SA Acting Chief Executive Officer, Brett Mahoney, said that while inflation increased, local businesses remained under pressure.

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

“Inflation has breached the upper end of the Reserve Bank’s target range, however this was largely due to one-off factors associated with natural disasters, including the rise in fruit and vegetable 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, fresh food and electricity prices are having a direct impact on consumer confidence and this is maintaining pressure on local businesses.

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

“The Reserve Bank will be well aware that any rate rises will significantly increase the pressure on the economy, particularly given the impact of the last rate rise.”