Financially-wary domestic consumers are already exhibiting a cautious approach to beef purchasing at retail and food service level, and the added impact on inflation from the Federal Government’s controversial carbon tax won’t help, judging by a report issued by a major lender yesterday.

Westpac has forecast a step-up in the quarterly pace of inflation in the third quarter ended September 30 to 1.2 percent for the quarter, from 0.5pc in Q2 and 0.1pc in Q1.

The bank attributes one third of that big rise to the direct and indirect effects of the carbon tax.

“The introduction of the carbon price mechanism (CPM) is estimated to have contributed 0.4pc of the quarterly rise. Without the carbon price we estimate that the CPI rise at 0.8pc for the quarter,” Westpac’s report said.

Overall, the carbon tax impact is expected to lift Australia’s annual pace of inflation from 1.2pc to 1.7pc.

“Electricity is where the price of carbon makes its largest contribution to inflation. In Q3 electricity prices are estimated to have risen by 20pc, of which half was due to the introduction of the CPM,” the report said.

Westpac estimated a 0.2pc contribution to the CPI from pricing carbon released from electricity generation. From gas and other household fuels, the carbon price contributed close to 0.1pc to the quarterly rise in the CPI.

The Australian Bureau of Statistics has not announced any plans to estimate the impact of the carbon price on the CPI.

Westpac suggests that core inflationary pressures (those not associated with the carbon tax) remained modest in the third quarter.

“We forecast that the average of the Reserve Bank’s core measures rose 0.7pc, up from 0.6pc in Q2 and 0.4pc in Q1. As such, we are forecasting the annual pace of core inflation to rise a touch, from 2.0pc/year to 2.2pc/year.”

“But even with electricity being trimmed out of the core measures, the carbon tax is expected to have had some impact on the core measures,” the report said.

Westpac estimates that the carbon tax lifted core inflation in the third quarter by around 0.2pc.

There is a ‘normal’ seasonal lift in the CPI in the September quarter each year of about 0.1pc due to the annual post-June 30 increases in utilities and property rates & charges, and restaurant and food service charges. This more than offsets the seasonal falls in fruit and veg, meat, dairy and pharmaceuticals (due to wider access to the Pharmaceutical Benefit Scheme).

10-year impacts on inflation

Australian Bureau of Statistics show that measured over the past ten years, electricity charges have risen at more than double the rate of inflation, increasing by 103pc. Water and sewerage was highest, rising at 111pc, petrolo was up 68pc, while vegetables showed the highest gain of all food items, up 65pc. At the other end of the scale, audio, visual and computing equipment fell 80pc in price, while mote behicles were back 12pc.