Printing Industries Australia has published a report that states that figures released on the 28th of January show that consumer prices have started to fall on the back of weakening economic conditions.
The December 2008 quarter inflation data released by the Australian Bureau of Statistics (ABS) reveals that annual inflation as measured by the consumer price index (CPI) fell by 0.3 per cent during the quarter, the largest quarterly fall since September quarter 1997.
As a result the annual rate of inflation fell from 5.0 per cent to 3.7 per cent.
The most significant price reductions were reported to have occurred for automotive fuel; motor vehicles; deposit and loan facilities and pharmaceuticals.
The most significant offsetting price increases were for rents; fruit; tobacco and take-away and fast foods.
The underlying rate of inflation which is closely monitored by the Reserve Bank of Australia (RBA) and which influences monetary policy settings also fell from 4.7 per cent during the September 2008 quarter to 4.4 per cent during the December quarter.
Inflation in the non-tradables sector rose by 0.6 per cent during the quarter and by 5.4 per cent during the year to December. Inflation in the tradables sector fell by 1.8 per cent during the quarter resulting in an annual increase of just 1.2 per cent.
Among the states and territories Brisbane reported the highest annual rate of inflation at 4.3 per cent followed by Sydney and Adelaide each at 3.8 per cent; Perth, Darwin and Canberra 3.7 per cent; Hobart 3.3 per cent and Melbourne 3.2 per cent reported the lowest annual rate of inflation.
The producer price index, which measures wholesale prices, was also released yesterday and showed a significant moderation in price pressures.
Preliminary stage prices increased by 0.3 per cent during the December quarter compared to 5.5 per cent during the September quarter; intermediate stage prices increased by 0.9 per cent compared with 3.7 per cent for the September quarter and final stage prices increased by 1.3 per cent during the December quarter compared with 2.0 per cent during the previous quarter.
The producer price index also confirms that businesses have started to pass on a larger proportion of their costs, no doubt as profit margins come under increased pressure.
At the industry level prices of articles produced by the printing, publishing and recorded media sector rose by 0.1 per cent during the December 2008 quarter and by 2.4 per cent during the year to December.
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Hagop Tchamkertenian |
Commenting on the release of the inflation data Printing Industries National Manager for Policy and Government Affairs, Hagop Tchamkertenian, said that the Australian economy was progressing through some challenging economic times.
"Today's inflation data points to the possible emergence of deflation. Economic conditions are weakening and a frenzy of discounting activity could result in a period that is associated with price reductions," he said.
"The problem with deflation is that because an expectation exists that prices will fall, consumers respond by postponing their purchases in the hope of purchasing the same product or service at a lower price at some point in the future.
"While lower prices may benefit consumers, they also affect discretionary consumer spending behaviour which drives retail sales. And as we know when retail trade starts being negatively impacted, it spells bad news for the printing and associated industries.
"This is why it is important that deflation does not become entrenched,"Mr Tchamkertenian said.
Printing Industries Australia
www.printnet.com.au
