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March quarter consumer price index

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NO. 43



The Treasurer, Mr. Phillip Lynch, said today that the March - .

quarter increase in the Consumer Price Index was a further ” encouraging sign that Government policies had enabled ..... ~ ...

substantial headway to be made against inflation. - ^ -

This was especially so when allowance was made for the fact that ' some of the direct price effects of devaluation must have been

felt in the March quarter - although it was not yet possible to say how important those effects had been. ' ~

The overall Index had increased by 2.3 per cent in the March ' ‘

quarter and was the lowest increase for a March quarter since 1973.

This followed increases of 2.8 per- cent (excluding Medibank effects), 2.2 per cent and 2.5 per cent in the preceding three quarters,

and 3.0 per cent in the March quarter last year.

Mr. Lynch noted that the Index, excluding hospital and medical services

had increased by 10.2 per cent* over the twelve months to the most

recent March quarter. ’ ’

He said that the March quarter C.P.Ii figure was another piece

of evidence pointing to the downward trend in the underlying rate

of inflation since this Government came to office.

In that context he noted that the revised December quarter national

accounts estimates released yesterday showed that the implicit

deflator for the major, components of gross national expenditure - '


the sum of all domestic final expenditure and therefore much broader .

in coverage than.the Consumer Price Index - increased by 1.3 per

cent i n .the December quarter compared with average quarterly increases of about 4 per cent in 1975. .

Noting the relationship between wages and prices, Mr. Lynch said

that the very low increase recorded in average weekly earnings in

the December quarter - about 1 per cent - was relevant in explaining the slow-down in consumer prices in the succeeding quarter.

It was to be hoped that the encouraging March quarter figure would

help to bring home to the community the benefits to be derived from the restraint which the Government had been persistently urging

in the wages field. : . .

Looking ahead, Mr. Lynch warned that the March figures were no cause for complacency.

In particular, the recent $5.70 increase in weekly award rates handed

down by the Conciliation and Arbitration Commission' would again set

back the progress towards increasing moderation of cost pressures.

" , . ".·!· " .

There would also be further direct price effects of devaluation

to be felt in the June and subsequent quarters.

But the encouraging March quarter figure underlined just how much

Australia had to lose now if continued restraint is not forthcoming.

This would be the key thrust in the submission which the Commonwealth,

next week, would be putting to the hearing on the March quarter by

the Conciliation and Arbitration Commission.



28 April, 1977.