Australia’s inflation accelerates, keeping rate hike in play
AUSTRALIA’S monthly inflation gauge accelerated, reflecting global trends amid higher oil prices, bolstering the case for the Reserve Bank to hike at least one more time.
The consumer price indicator rose 5.2 per cent in August from a year earlier, matching economists’ estimates, Australian Bureau of Statistics data showed on Wednesday. The result bucks three months of slowdown in the pace of price gains and will be a focus for new RBA Governor Michele Bullock, who chairs her first board meeting next week.
The RBA has placed itself in data-dependent mode after raising interest rates 12 times since May 2022 to 4.1 per cent. It has paused at the past three meetings, reflecting the cooling in consumer prices. The Australian dollar and the yield on policy-sensitive three-year bonds were little changed.
Wednesday’s report showed that when excluding volatile items, annual inflation eased to 5.5 per cent from 5.8 per cent.
The data vindicate the RBA’s stance that further tightening may be necessary and that it’s too early to declare victory against inflation.
Australia has moved more cautiously in this cycle than its counterparts — its 4 percentage points of hikes compares with 5.25 by New Zealand and the US.
Wednesday’s report comes after core consumer prices in the US marked their first acceleration in six months in August, adding to concerns that a renewed momentum in the economy was reigniting price pressure. The Fed will receive the next set of inflation data on Sept 29.
Today’s report is one of the last major pieces of data that Bullock will see before meeting on Tuesday. BLOOMBERG
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