This is getting to be a habit: the economic forecasters were very wrong again with their predictions about what is happening to inflation. The regular Bloomberg survey of the predictions of 15 economists on what the quarterly producer price index would show had a median forecast of a 0.6 per cent rise. The actual Australian Bureau of Statistics figure for the March quarter released this morning was a fall of 0.4 per cent!
The decrease of 0.4% in the final (Stage 3) index reflected a fall of 1.0% in the price of domestically produced items, and a rise of 3.9% in the price of imported items. The domestic component decreased due to price falls in building construction (-1.6%), petroleum refining (-10.0%) and bakery product manufacturing (-7.2%). These decreases were partially offset by price rises in electricity, gas and water (+2.0%), and other agriculture (+4.3%). The imports component increased due to price rises for industrial machinery and equipment manufacturing (+6.9%), motor vehicle and part manufacturing (+4.4%), photographic and scientific equipment manufacturing (+13.5%) and tobacco product manufacturing (+23.2%). These increases were partially offset by price falls in dairy product manufacturing (-35.7%) and basic chemical manufacturing (-48.2%).