By Keri Algar
SYDNEY, NSW: The Reserve Bank of Australia has decided to leave the cash rate unchanged at 4.75 per cent despite signs of consumer price inflation.
The Consumer Price Index (CPI) last week recorded the most significant rise since 2008, registering 1.6 per cent for the March quarter, up from 0.4 per cent in the December quarter. The most significant price rises were for vegetables (up 16 per cent) and fruit (up 14.5 per cent), as a result of Cyclone Yasi.
Glen Stevens, RBA Governor, today said the Bank forecasts the affected prices will fall back later in the year.
“The Bank expects that, as the temporary price shocks dissipate over the coming quarters, CPI inflation will be close to target over the year ahead,” said Stevens.
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“While the rising exchange rate will be helping to hold down prices for some consumer products over the coming few quarters, over the longer term inflation can be expected to increase somewhat if economic conditions evolve broadly as expected.”