Australian CPI rise in pharmaceutical prices explained

The pace of Australia's headline Consumer Price Index (CPI) inflation rose just slightly in the March quarter taking the annual pace of increase below the mid-point of the Reserve Bank of Australia's 2% to 3% target band, according to Market News International. The headline consumer price index rose 0.1% on-quarter in the March quarter compared with a flat outcome in the December quarter, taking the year-on-year increase down sharply to 1.6% rise versus 3.1% increase in the December quarter, the Australian Bureau of Statistics said Tuesday.

The 0.1% rise in headline CPI was mainly due to pharmaceutical products (+14.1%), secondary education (+7.7%), automotive fuel (+2.5%), medical and hospital services (+2.1%), tertiary education (+4.7%) and rents (+1.0%). This was offset by (-30.0%), international holiday travel and accommodation (-4.8%), furniture (-6.0%), audio, visual and computing equipment (-6.3%) and domestic holiday travel and accommodation (-2.0%).

The apparent surge in pharmaceutical prices included in yesterday’s CPI for the March quarter is easily explained by the mechanics of the Pharmaceutical Benefits Scheme (PBS) safety net, argued Medicines Australia chief executive Dr Brendan Shaw.