Fears of another rate rise next week appear to have been put to rest, with the Australian Bureau of Statistics revealing inflation rose by a lower-than-expected 0.7% during the September quarter, putting yearly inflation at 2.8% in the 12 months to September.
The rise places inflation within the RBA’s target band of between 2-3%.
The figures show the most significant price increases this quarter were for tobacco, which rose by 7%, water and sewerage, up 12.8%, electricity, up 6%, property rates and charges, up 6.2% and rents, up 1.1%.
The most significant price falls were for automotive fuel, which fell 3.7%, along with vegetables, down 5.4%, pharmaceuticals, down 3.9%, AV and computing equipment, down 2.7% and soft drinks, waters and juices, down 1.8%.
The September quarter rise of 0.7% is higher than the 0.6% rise recorded during the June quarter, while the annual rise of 2.8% is lower than the rate of 3.1% recorded during June.
CommSec economist Craig James says the result shows the Reserve Bank will be “hard pressed” to justify a rate rise next week.
“Low inflation is in everyone’s interests. It shows that the economy is functioning well and allows interest rates to remain at current levels, allowing consumers and companies to get on with business.”
Meanwhile, National Australia Bank has recorded total cash earnings of $4.58 billion for the year to 30 September, up from $3.84 billion during the previous corresponding period. Revenue fell 1.6%, down to $16.6 billion.
However, the company says funding pressures are still a significant problem the bank is attempting to deal with.
The bank said bad and doubtful debts fell by 40.7% to $2.3 billion. However, NAB chief executive Cameron Clyne pointed out the cost of funding is continuing to pose a problem. “The marginal funding cost has come down. But the reality is average funding costs are higher,” he said.
However, he also noted that “we are seeing some early signs that demand is returning”, with regards to business lending. He expects higher business activity during 2011.
Virgin Blue Holdings chief executive John Borghetti says he is confident about the company’s upcoming joint venture plans, including plans with Delta in the US, and says the deals are “not dead yet”.
In an interview with Business Spectator, Borghetti says the Virgin-Etihad alliance will contribute “significant consumer benefits to this country”.
“That deal is very important and I think we have every hope that it will be finally approved by the ACCC, although we haven’t received approval yet,” he said.
He also said that 2011 should provide a more solid operating environment, and expects better performances in the year ahead.
“I think that next year should be a reasonably, you know, I’m not saying a stellar year, but I suppose what I’m saying is that we’ve seen the bottom of the market and it’s really a question now of how will it pick up.”
Shares flat after weak Wall Street leads
The Australian share market has opened flat today, following weak leads from both the European and North American markets, where concern over mortgage markets is still prevalent.
The benchmark S&P/ASX200 index was up eight points or 0.18% to 4695.7 at 12.15 AEST, while the Australian dollar eased back to US97c after the ABS revealed inflation data was lower than expected.
AMP shares gained 1.3% to $5.59, while Commonwealth Bank shares rose 0.3% to $50.33. NAB shares lifted 2.8% to $25.44 as Westpac gained 1.8% to $23.25.
Opposition leader Tony Abbot has supported Joe Hockey’s nine-point plan to strengthen banking competition, as outlined for the Australian Industry Group.
“[Joe Hockey] made a very important speech to the Australian Industry Group earlier this week and in it he did put forward a nine-point plan to boost competition in our banking sector and to try to ensure that borrowers and small businesses get the advantage of lower interest rates. I fully support the nine-point plan,” Abbott told The Australian.
Property group Stockland has said it regrets the $208 million loss its shareholders will encounter due to the sale of the company’s stake in GPT Group.
“Since we acquired the stake, GPT has restructured its balance sheet, strengthened its board and management and there is now little prospect of acquiring assets,” Stockland managing director Matthew Quinn said in a statement.
“I am disappointed and regret the loss suffered by our security holders. We are committed to building security holder value,” he added.
Ford posts higher than expected profit
Ford has recorded a higher-than-expected third-quarter net profit of $US1.7 billion, or 43 cents per share, up from $US997 million during the previous corresponding period.
The company also said it had repaid $US2 billion in debt in the third quarter, and expects to pay off a debt to the union retiree healthcare trust fund this coming Friday.
“Overall, we are moving from fixing the fundamentals of our business and weathering the downturn to growing the business profitably around the world,” chief executive Alan Mulally said in a statement.
However, low consumer confidence results kept investor optimism down. The Dow Jones Industrial Average gained just 5.41 points or 0.05% to 11,169.46.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
