The ABS today released its much awaited June quarter inflation data, revealing a headline annual inflation rate of 3.8% ahead of the RBA rates decision next week.
The consumer price index, the figure watched as the main level of inflation, rose 1% during the quarter following a 1% increase in prices in the March quarter.
This saw the annual rate lift to 3.8%, above the 3.6% rate seen in the March quarter and marking the first increase in annual CPI inflation since the December 2022 quarter.
The news, however, didn’t come as a shock to economists who had anticipated the increase in the headline figure.
StoneX vice president – Derivatives, Everett O’Chee, spoke to Proactive to discuss the CPI figures.
Read more: RBA faces tough choice with new CPI data: credibility or persistent inflation?
RBA has decision to make
The data provide insight for the RBA board which will meet on Tuesday to decide whether to again keep rates on hold.
Economists had anticipated the increase in headline prices so it hasn't taken officials by surprise.
However, the 'trimmed mean' measure of inflation — an important measure of underlying or 'core' inflation that the Reserve Bank focuses on — fell slightly in the June quarter. It fell from an annual rate of 4% to 3.9%.
The RBA is targeting that trimmed to fall back down into the 2% to 3% range. This specific measure of inflation has been declining continuously for the last six quarters.
State Street (NYSE:STT) Global Markets’ head of APAC Macro Strategy Dwyfor Evans said: “State Street’s quarterly PriceStats reading for Australia at 97bps was in line with the quarterly official CPI read, keeping headline inflation uncomfortably high for the RBA, which is the only G10 central bank – bar the BoJ – with realistic optionality around another interest rate hike.
“A sub-4 handle on the trimmed mean inflation indicator offers some relief, but a longer trend of weaker prices is required to adjust RBA bias towards easing, a prospect that remains some way away.”