🍎 🍕 Less apples, more pizza 🤔 Have you seen Buffett’s portfolio recently?Explore for Free

Australia CPI grows less than expected in May, core inflation still high

Published 28/06/2023, 02:52 pm
© Reuters.
AUD/USD
-
AXJO
-

Investing.com -- Australian consumer price index inflation grew at a slower-than-expected pace in May on smaller advances in fuel prices, although a gauge of core inflation showed that other factors pushing up inflation were still in play.

Australia CPI rose 5.6% in the 12 months to May, lower than expectations for a rise of 6.1% and a sharp drop from the 6.8% seen in April, data from the Australian Bureau of Statistics (ABS) showed on Wednesday.

The drop in inflation was largely driven by falling automotive fuel prices, amid weakness in global crude markets, with the overall CPI indicator marking its smallest rise since April 2022.

“While prices have kept rising for most goods and services, many increases were smaller than we have seen in recent months,” Michelle Marquardt, ABS head of prices statistics said in a note.

But barring volatile items such as fuel, fresh food, and holiday travel, CPI inflation grew 6.4% in May, down only slightly from the 6.5% seen in April. The reading, while off a 7.1% peak hit in December, indicated that May’s drop in overall inflation was largely driven by weakness in global oil prices, and that the underlying trends pushing up Australian inflation were still in play.

Housing, food, and household goods inflation remained strong through May.

Still, with both overall and core CPI inflation moving away from recent peaks, markets began pricing in the possibility that the Reserve Bank of Australia may soon cease its rate hike cycle.

The Australian dollar slid 0.8% on Wednesday, while the ASX 200 index rallied 1.3% following the inflation data, on the prospect of an RBA pause. The bank had shocked markets with two back-to-back rate hikes over the past two months, as inflation showed little signs of slowing down.

But even with a potential pause in the RBA’s rate hike cycle, the Australian economy is expected to cool substantially in the coming months, with rates likely to remain higher for longer.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.