Interest rates peak
The ABS released its producer price index figures, which increased by 1 per cent over the March 2023 quarter.
Over the past year prices at final demand increased 5.2 per cent, but on the bright side price increases don't look quite so hot now.
Over the past year producer prices have largely been driven by a rampant surge in electricity and gas prices (up 22.6 per cent!).
Quite how a country like Australia has high electricity and gas prices - especially as a reduction in power prices was the key Labor election pledge - is another story!
Another major driver of producer prices over the year has been building and construction prices (+9.6 per cent), but at least there is some improvement underway here, with prices up only +1.1 per cent in Q1.
The Housing Industry Association reported that there has been a painful shortage of tradies over the past couple of year, however this is gradually being righted as new skilled migrants arrive.
In fact trade prices increased only 0.03 per cent in the March quarter on the HIA's index, with the recent series of interest rate hikes yet to flow through here (since there remains a large volume of construction work in the pipeline):
Source: HIA
Construction prices will decline eventually, and financial markets believe we have seen the end of the interest rate hiking cycle.
Source: ASX
The legendary Bill Evans of Westpac amended his call today to no further hikes, a lower peak than had previously been expected.
Further details from Westpac are here.
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Import prices also fell -4.2 per cent in the March quarter on lower fuel prices, according to the ABS.
