Energy cost rises filter through
Data released on Friday shows prices at all levels of production jumped in the September quarter as the lower Australian dollar lifted import prices, particularly petrol. Utility prices, including electricity, also rose.
"The higher business inflation reading coupled with the larger CPI reading last week does seem to suggest that inflation has bottomed out," CommSec economist Savanth Sebastian said in a note to clients.
The consumer price index rose 1.2 per cent in the September quarter, the largest rise in a year.
Friday's producer prices index (PPI) report, alongside figures showing a further strengthening in house prices and improved manufacturing activity in both Australia and China, cemented expectations for no change to the cash rate when the central bank board meets on Tuesday.
Mr Sebastian expects the Reserve Bank to keep interest rates on hold over the next couple of months.
"It looks very likely that the low point in the rate cycle has been reached," he said.
Friday's PPI at the final stage of production rose 1.3 per cent in the September quarter, the biggest increase in three years. Import prices surged 5.9 per cent in the quarter, reflecting the lower dollar, while domestic prices showed a more modest 0.8 per cent increase.
Producer prices overall come off a low base, which left the annual rate of 1.9 per cent below the RBA's 2-to-3 per cent inflation target band.
However, the RBA will be keeping an eye on house prices, which rose a further 1.3 per cent in October, according to the RP Data-Rismark Home Value Index.
Prices are 7.9 per cent higher over the year, having risen by 6.9 per cent in the past five months.
Manufacturing grew for a second month in a row as production rose for the first time in 2½ years and new orders continued to recover.
The Australian Industry Group Performance of Manufacturing Index rose 1.5 points in October to 53.2, holding above the key 50 mark that indicates activity is expanding.
Ai Group chief executive Innes Willox said, while the result was encouraging, the domestic currency remained a barrier to export growth.
"Manufacturers' margins remain under pressure as wage and non-wage costs continue to rise ahead of selling prices," Mr Willox said.
Frequently Asked Questions about this Article…
Energy costs are rising for businesses due to a combination of factors, including a lower Australian dollar which has increased import prices, particularly for petrol, and rising utility prices such as electricity.
Energy costs are rising for businesses due to a combination of factors, including the lower Australian dollar, which has increased import prices, particularly for petrol, and a general rise in utility prices such as electricity.
Everyday consumers may face higher prices in the coming months as businesses pass on the increased energy costs to their customers.
The rise in business energy costs is likely to lead to higher prices for consumers in the coming months, as businesses may pass on these increased costs to their customers.
The lower Australian dollar has led to a 5.9% surge in import prices, making imported goods more expensive and contributing to overall price increases.
The lower Australian dollar has led to a 5.9% surge in import prices during the September quarter, making imported goods more expensive and contributing to overall inflation.
The article suggests that inflation has bottomed out, with both the consumer price index and producer prices index showing significant increases in the September quarter.
The consumer price index (CPI) rose by 1.2% in the September quarter, marking the largest increase in a year, which suggests that inflation may have bottomed out.
According to CommSec economist Savanth Sebastian, the Reserve Bank of Australia is expected to keep interest rates on hold over the next couple of months, as the low point in the rate cycle appears to have been reached.
According to CommSec economist Savanth Sebastian, the Reserve Bank of Australia is expected to keep interest rates on hold over the next couple of months, as the low point in the rate cycle appears to have been reached.
House prices are on the rise, with a 1.3% increase in October and a 7.9% increase over the year, indicating a strengthening housing market.
House prices in Australia have risen by 1.3% in October and are 7.9% higher over the year, with a 6.9% increase in the past five months, according to the RP Data-Rismark Home Value Index.
Manufacturing activity in Australia is expanding, with the Australian Industry Group Performance of Manufacturing Index rising to 53.2 in October, indicating growth for the second consecutive month.
Manufacturing activity in Australia is expanding, with the Australian Industry Group Performance of Manufacturing Index rising to 53.2 in October, indicating growth for the second consecutive month.
Manufacturers are facing pressure on their margins due to rising wage and non-wage costs that are outpacing selling prices, and the domestic currency remains a barrier to export growth.
Despite growth in manufacturing, Australian manufacturers face challenges such as pressure on margins due to rising wage and non-wage costs, and the domestic currency acting as a barrier to export growth.
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