Of the most concern to printers, is increasing inflation as indicated in the June 2006 quarter Consumer Price Index (CPI), by the Australian Bureau of Statistics (ABS). The CPI figures show headline inflation has broken the upper limit of the target range of 2-3 per cent set by the Reserve Bank.
According to the figures, headline inflation increased by 1.6 per cent during the quarter, resulting in an annual rate of 4.0 per cent. Annual headline inflation is now at a five-year-high and the current quarter rise represents the largest quarterly rise since September 2000 – the first quarter following the introduction of the GST.
Contributing most to the overall increase was the price of fruit and automotive fuel. Other significant contributors were hospital and medical services; house purchases; deposit and loan facilities; rents; other financial services; tobacco; house repairs and maintenance; and furniture.
Manager of Industry and Commercial Policy at Printing Industries, Hagop Tchamkertenian, says the recent ABS data did not come as a surprise given recent developments driven by external factors such as increased fuel prices.
“The June 2006 quarter producer price indexes were released which showed that inflationary pressures were building up in the system,” he says.
“Preliminary stage prices increased by 9.4 per cent during the year to June; intermediate prices rose by 8.0 per cent while final stage prices increased by 4.5 per cent.
“Even with producers at each stage deciding to absorb costs, final stage costs still were up by 18.4 per cent compared to the March quarter.
Tchmakertenian says higher inflation means higher prices for raw materials involved in printing, publishing and media industries – further burdening businesses with increased operating costs.
“As for the printing, publishing and recorded media industry, prices of materials used rose by 1.5 per cent during the quarter and by 0.8 per cent during the year to June. Industry output prices rose by 0.3 per cent during the June quarter and were up by 2.0 per cent during the year to June,” he says.
Tchmakertenian says that a lift in rates would have a detrimental impact on the printing industry. It would dampen economic activity and sectors like retail and advertising, which are critical for the success and prosperity of the printing industry, would be amongst the casualties.
“Given that underlying inflation is still running well under 3 per cent, it might be prudent for the Reserve Bank to keep interest rates on hold,” he says.
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