Australian Third-Quarter Producer Prices Rise 0.1%
Prices paid to Australian producers rose in the third quarter as costs for electricity, water and gasoline climbed.
The producer prices index advanced 0.1 percent from the second quarter, when it fell 0.8 percent, the Bureau of Statistics said in Sydney today. The median estimate of 17 economists surveyed by Bloomberg was for a 0.3 percent gain. The index rose 0.2 percent from a year earlier.
The less-than forecast gain in wholesale prices as a surge in the Australian currency cuts the cost of imported goods and services, may give central bank Governor Glenn Stevens scope to slow the pace of interest-rate increases. Policy makers said last week their “very expansionary setting of policy was no longer necessary, and possibly imprudent.”
While domestic demand “remains reasonably firm, it’s unlikely to provide firms with any significant pricing power,” Shane Lee, a senior economist at Australia & New Zealand Banking Group Ltd. in Melbourne, said ahead of today’s report.
Electricity, gas and water costs rose 12.1 percent in the third quarter and prices for gasoline gained 6 percent, today’s report showed. By contrast, the cost of computer services fell 7.1 percent.
A report this week may show consumer prices rose at a faster pace in the third quarter, gaining 0.9 percent from the previous three months when they increased 0.5 percent, according to the median estimate of 20 economists surveyed by Bloomberg. Inflation figures will be published on Oct. 28.
Gasoline Prices
The increase in wholesale prices was stoked by a 12 percent gain in gasoline costs during the third quarter. That offset a 7 percent climb in the Australian dollar, which reduced the cost of imports, Craig James, a senior economist at Commonwealth Bank of Australia, said ahead of today’s report.
Australian central bank officials, who this month became the first Group of 20 policy makers to raise borrowing costs since the height of the financial crisis, said last week that maintaining the benchmark interest rate at “very low levels” could threaten the bank’s goal of keeping inflation between 2 percent and 3 percent.
Stevens raised the benchmark lending rate on Oct. 6 to 3.25 percent from a 49-year low of 3 percent. Investors are certain he will increase the rate by at least another quarter point on Nov. 3, according to Bloomberg calculations based on interbank futures on the Sydney Futures Exchange.
There is an 18 percent chance of a half-point increase, the futures showed at 8:52 a.m.
Gross domestic product expanded 1 percent in the first half of this year as consumers increased spending, spurred by the central bank slashing borrowing costs by a record 4.25 percentage points between September last year and April, plus A$42 billion ($39 billion) in government stimulus spending.