Australia's producer price index ( PPI) at the final stage of production rose 1.2 percent in the March quarter 2011 from the December quarter 2010 and increased 2. 9 percent from a year earlier, the Australian Bureau of Statistics (ABS) reported on Thursday.
Economists' forecasts had centered on the March quarter PPI to rise 1.0 percent for an annual rise of 2.7 percent.
The PPI figures for March quarter were slightly better than market expectations but there were no surprises, Australia's economists said on Thursday.
"We saw a pretty healthy increase in producer prices driven by rising oil costs and also agricultural goods, which were also up in the quarter," Australia's investment banking firm Macquarie Group associate economist Benjamin Dinte said.
"So rising petrol, rising food prices are going to be the key factors when we get the CPI (consumer price index) data next week. "
He said the Reserve Bank of Australia (RBA) would be looking more closely at the underlying CPI figures due for release on Wednesday, April 27, 2011, which he expected to be more contained.
Chief economist Stephen Roberts from Nomura Australia, a leading financial services firm, said the key story was that the domestic part of the PPI was showing signs of inflating, with domestic final stage PPI up by 1.4 percent in the quarter and up 3. 9 percent annually.
"So there's a fair bit of inflation building in the pipeline," Roberts said.
In the March quarter, at the intermediate stage, the PPI was up 2.3 percent, while at the preliminary stage it rose 2.6 percent, the ABS said on Thursday.
Over the year to March, at the intermediate stage the PPI rose 4.4 percent and at the preliminary stage it was up 5.5 percent.