Australia’s monthly CPI higher than estimates, Aussie edges up
With the Trump administration’s tariff regime threatening global activity, inflation is likely to begin to take second place to concerns about the economic outlook
[SYDNEY] A gauge of Australia’s monthly inflation came in slightly faster than expected in April, coinciding with a period of tariff turmoil that roiled markets and encouraged the Reserve Bank of Australia (RBA) to lower interest rates last week.
The Consumer Price Index (CPI) indicator stayed at 2.4 per cent, compared with economists’ estimate of 2.3 per cent, data released by the Australian Bureau of Statistics (ABS) showed on Wednesday (May 28). The headline figure has now been inside the RBA’s 2 to 3 per cent band for nine months.
The trimmed mean measure, which smooths out volatile items such as food and energy and is the focus of the RBA’s attention, rose to 2.8 per cent in April from 2.7 per cent in the prior month.
The central bank has been monitoring core inflation as government rebates and subsidies have somewhat suppressed the headline figure.
The Aussie dollar edged higher and the benchmark share index pared gains after the data.
The RBA cut its cash rate by a quarter-percentage point last week to 3.85 per cent, its second reduction for the year, as policymakers view risks of another burst of price pressures to be receding. Governor Michele Bullock signalled after the decision that she’s more concerned about downside risks to economic growth as trade turmoil and geopolitical upheaval come to the fore.
While the monthly gauge is not as comprehensive as the quarterly data that guides central bank policy, it nonetheless gives RBA officials a sense of the trajectory of consumer prices. Still, with the Trump administration’s tariff regime threatening global activity, inflation is likely to begin to take second place to concerns about the economic outlook.
The RBA next meets on Jul 7 to 8 and traders are pricing about a 70 per cent chance of a cut at that meeting and reckon there’s a high chance of three more rate reductions this year.
Wednesday’s report also showed:
- The largest contributors to the annual movement were food and non-alcoholic beverages, housing and recreation and culture.
- “While annual inflation eased for most food categories in April, egg prices were up by 18.6 per cent in the past 12 months. This comes as supply has been affected by bird flu outbreaks,” said Michelle Marquardt, ABS head of prices statistics.
- Rents rose 5 per cent in the 12 months to April, the lowest annual growth since February 2023. BLOOMBERG
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