Carbon tax has 'modest' impact: Swan

LABOR'S controversial carbon tax might not push up consumer prices in its first year by as much as the federal government expected.

Economists believe the price impact could actually undershoot Treasury modelling of a contribution of 0.7 per cent in 2012/13.

They also believe the bulk of the impact of the carbon price regime, which came in on July 1, on inflation, might have already been seen in the September quarter.

Following the release of September quarter consumer price (CPI) index figures on Wednesday, Treasurer Wayne Swan said that three months in, the pollution price was having only a "modest" effect.

"Contrary to the campaigns launched by the Liberal party there is nothing in today's figures that suggest any evidence of a significant broad-based price increase due to the impact of the carbon price," Mr Swan told reporters in Sydney.

"At this stage the result remains well within our expectations of the carbon price impact on electricity."

The CPI jumped 1.4 per cent in the September quarter for an annual rate of two per cent.

While quarterly electricity prices surged 15.3 per cent, Mr Swan insisted the carbon price wasn't the only factor because regulators had increased prices to pay for "poles and wires" infrastructure investment.

Commonwealth Bank of Australia said the Australian Bureau of Statistics report does suggest the impact of the carbon price on inflation was less than expected.

Chief economist Michael Blythe compared the average contribution of higher utility prices on third-quarter CPI growth over the past two years with the 2012 figure of 0.48 percentage points.

"The gap of 0.2 percentage points should represent the bulk of the carbon tax impact on consumer prices," he wrote in a client note.

"This outcome suggests the price impact will fall short of earlier Treasury modelling work that put the CPI contribution in 2012/13 at 0.7 percentage points."

Mr Swan expects the impact will pass through the economy relatively quickly.

"We won't necessarily have all of the impact of the carbon in this quarter (but) we'll certainly have the great bulk of it," he said.

JP Morgan chief economist Stephen Walters noted the carbon tax was contributing to soaring electricity and gas prices, although the precise extent of the impact was hard to determine.

However, a "back-of-the envelope" estimate suggests it added 0.3 to 0.4 percentage points to the headline September figure.

Westpac agreed with that. In terms of underlying inflation the bank estimated the price impact would be around 0.1 to 0.2 percentage points in the quarter.

Shadow treasurer Joe Hockey said the CPI numbers confirmed Labor's carbon tax was have a devastating impact on living costs.

But Climate Change Minister Greg Combet told an investment conference carbon pricing had not caused prices to "rise unimaginably as some of the more fanciful and deceitful forecasts in the political market place had claimed".

Treasury has estimated the carbon tax will push up consumer prices by 0.7 per cent in 2012/13 with a second increase of 0.2 per cent by 2015/16. It also said electricity prices would jump 10 per cent.

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