Commercial Prices and activity expected to rise

Press, 28 March 1979, Page 24

Commercial Prices and activity expected to rise

iNZPA Canberra!' |i The boom in rural in-1' comes in Australia will contribute, through increased prices and expansion of the]; money supply, to worsening i< domestic inflation, but in-ji creased activity, says the jt Australian Industries Devel-y opment Association. : In its March bulletin A.I.D.A. said it was likely i that somewhere between two-and-half and three percentage points would be ; added to the consumer price < index during 1979-80. There would also be pres- i sures towards currency up- ;

ivaluation and the Australian [dollar would remain ■ “tricky.” i “It can only he hoped that I this new situation will be I anticipated by the committee | lof three setting the ex- | change rate system, as well ■as that group has managed lover the last year or so,” it said. A recovery in the rural sector would assist in improving the employment situation. and help curtail the growth of the Government deficit. The gross value of agricultural output was likey to) rise during 1978-79 b'y more)

[than 30 per cent over the) previous year, and virtually) all the implications were) ■ good for activity, volumes) and employment, but bad for), [inflation. ) "This is because the in-1 ■ creased agricultural output), [will be the basis for the! direct and indirect contribu-) ition to activity and jobs in' [the rest of the economy, but: ■ will also contribute directly) ■ and indirectly to domestic) [inflation," it said.

Household consumption ■ goods were likely to be particular beneficiaries, along [With plant and equipment. “This will provide both a technical update in the rural sector, and a welcome stimulus to many Australian industries, most notably tractors and farm machinery, steel producers and some parts of the building industry.”

A.I.D.A. estimated that the addition to national production during 1978-79 would be in the order of one half to three-quarters of one percentage point, and closer to two per cent in 1979-80. It also predicted the removal of constraints on domestic expansion, which it said would assist in the recovery in employment in the run up to the 1980 election.