interest rates are predicted to rise again in August following an increase of 1.2% in the consumer price index (CPI) for the quarter to June.
The index is a marker of inflation and reflects price rises in goods and services across the Australian economy, including house prices and rental costs.
Official figures released by the Australian Bureau of Statistics (ABS) shows prices of many goods have risen during the last quarter and year with food going up 1.7% in the quarter and 2.2% in the year, housing 0.8% in the quarter and 3.6% in the year and health up 2.1% in the quarter and 4.1% in the year.
The most significant price rises this quarter were for petrol - up 9.1%, hospital and medical services - up 3.4%, fruit - up 8.4%, rents - up 1.6% and vegetables - up 6.1%.
A response to the figures, released by CommSec, suggests that a thriving Australian economy during the last five years has contributed to the inflation growth, meaning inevitable interest rate rises to keep the prices under control.
"During the past five years wages have risen by 25%, but the general level of inflation has risen by 14%.That equates to an extra $200 per month in spending. Consumer spending has increased by 25% during the past five years, meaning people have found extra goods to buy."
The CommSec report highlights concerns that increasing interest rates may have the effect of putting upward pressure in inflation in the housing market as constrained construction activity, due to affordability issues, will send rents (part of the CPI calculation) soaring.
The report said: "The interest rate hikes delivered in 2006 led to a sharp tightening in the rental market and the effects of that tightening continue to show up in the CPI data. Rents rose by 1.6% in the quarter and 5.2% over the year - the fastest annual rate in 17 years."
The ABS statistics show that all goods and services across Australia in June 2007 are 57.5% more expensive than in 1990. Brisbane and Adelaide are the most expensive, average 60.3% more than in 1990.
Housing is 35.3% more expensive in June this year than 1990, while food is 72.8% more expensive and health 130% more expensive than in 1990.
With interest rates at their lowest for more than 50 years, there are some great rates available. The best thing to do is to compare rates from all the lenders. Let us help take the leg work out of doing this - Compare Home Loans now