Weaker PPI suggests price discounting
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SYDNEY, Feb 1 AAP
February 01 2013, 5:33PM
The price of raw materials rose faster than the price of final products in the last three months of 2013.
Australia's producer price index at the final stage of production rose 0.2 per cent in the December quarter for an annual gain of 1.0 per cent, figures released by the Australian Bureau of Statistics on Friday show.
Commonwealth Bank associate economist Diana Mousina said the PPI rose faster at the preliminary and intermediate levels during the quarter than at the final level.
The PPI rose 0.6 per cent at both the intermediate and preliminary levels.
Ms Mousina said the difference between preliminary and final PPI may reflect pressure for producers and manufacturers to discount prices.
"For the preliminary stages the cost of the goods, which is what the producers pay, seems to be the highest and it seems to go down from there," she said.
"So I guess that gives a bit of indication that there is a bit of discounting going on and we can see that as well with the retail numbers."
Ms Mousina said the figures were in line with December consumer price index figures, released in January, which showed 0.2 per cent headline inflation.
"It just shows that inflationary pressures are quite weak in the economy, as we saw with the fourth quarter CPI release, so if the RBA decides that it wants to cut interest rates then it has room to do that."