Investing.com-- Australian consumer price index inflation grew slightly more than expected in the first quarter, while underlying inflation fell back into the Reserve Bank of Australia’s target range, supporting the case for a rate cut.
CPI grew 2.4% year-on-year in the first quarter, a similar pace seen in the prior quarter, but was just above expectations of 2.3%, data from the Australian Bureau of Statistics showed on Wednesday.
Quarter-on-quarter CPI grew 0.9%, slightly above expectations of a 0.8% rise.
Underlying inflation, as represented by annual trimmed mean CPI, decelerated to 2.9% in the March quarter, from 3.2% in Q4. The reading fell back into the RBA’s 2% to 3% annual target range.
"The rise was driven by increases in electricity prices in Brisbane, where most households have used up the $1,000 Queensland State Government electricity rebate, resulting in higher out-of-pocket electricity costs," the ABS survey stated.
A separate monthly CPI reading showed a steady 2.4% rise for March. The print indicated that inflation still picked up towards the end of the year, amid increased holiday spending.
According to the data, fruit and vegetables such as avocados, mangoes, asparagus, tomatoes and lettuce saw seasonal price rises following reduced supply.
Services inflation slowed to 3.7% from 4.3%, suggesting broader price pressures were moderating.
The Reserve Bank of Australia (RBA) is expected to cut interest rates by 25 basis points at its next policy meeting on May 20. Analysts believe that softer domestic labour market indicators, weaker-than-expected wage growth, and growing global economic uncertainty will support the RBA’s decision to cut rates.
The central bank held rates steady in April amid global uncertainty fuelled by U.S. trade tariffs.