Australian Producer Price Index Rises More Than Expectations During The First Quarter Of 2011

Today, Australian data fundamental paves the way for the Reserve Bank of Australia to increase the interest rate after the producer price index accelerated more than expected during the first three months of the year, as the increases in cost for petroleum refining and electricity, gas and water. The Australian economy issued its producers price index for the three months ending March, which increased sharply 1.2%, from the previous 0.1% in fourth quarter of 2010, came better than the expectations that referred to 1.0%. Moreover, the annualized producer price index rose 2.9% in the first quarter of 2011, compared with a previous 2.7% a year earlier, where the market’s anticipations estimated of 2.7%. Today’s report showed that the petroleum refining surged 13% and electricity, gas and water rose by 2.7% in 1st quarter. Moreover, Crude oil prices have climbed by about 25 percent since mid-February amid escalating the Situation in Middle East. The Reserve Bank of Australia has kept the benchmark interest rates unchanged steady for fourth consecutive month at the highest level of 4.75% after seven increases from October 2009 to November 2010, as the natural disaster will contribute to disrupt the economic growth in Australia. The Reserve Bank of Australia reported this week its minutes to show the economic growth in Australia to moderate during the first three months of the year, as the natural disasters that hit the nation on January and February. Furthermore, the RBA sees inflation rates to be quite high in the quarter of January to March, on natural floods, while the bank aims to keep inflation between 2% and 3%, and the Australian currency’s strength has helped slow parts of the economy. On the other hand, Higher demand for resources helped to compensate the decline in consumers spending as well as helping to balance inflation pressures, also increasing resources demand is working to push mining sector forward, supporting unemployment rates to decline, because of the mining companies demand to add more workers. The Australian dollar has recorded a new multi decades high against its US dollar at 1.0749 after the rise producer price index, boosting demand for assets linked to growth along with the rise in gold which trades above $1500. The AUD/USD pair increased sharply during yesterday’s session, closed at 1.0691.