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Australia’s annual inflation rate falls to 6.8% fuelling hopes cost of living pressures are easing Australia’s annual inflation rate falls to 6.8% fuelling hopes cost of living pressures are easing
(31 minutes later)
Figures indicate Reserve Bank may consider pausing interest rates at its next meeting on TuesdayFigures indicate Reserve Bank may consider pausing interest rates at its next meeting on Tuesday
Australia’s annual inflation rate slowed in February, led by smaller rises for fuel and housing, adding to evidence that the worst of the price increases has passed.Australia’s annual inflation rate slowed in February, led by smaller rises for fuel and housing, adding to evidence that the worst of the price increases has passed.
The consumer price index rose at annual pace of 6.8% last month, the Australian Bureau of Statistics reported on Wednesday. Economists had expected the annual rate would have dropped to about 7.2% from January’s 7.4% pace.The consumer price index rose at annual pace of 6.8% last month, the Australian Bureau of Statistics reported on Wednesday. Economists had expected the annual rate would have dropped to about 7.2% from January’s 7.4% pace.
The 6.8% pace was the slowest since June last year.The 6.8% pace was the slowest since June last year.
February annual CPI slows further to 6.8% from 7.4% in January. (Market had been expecting about 7.2%, so RBA rate pause next week now a little more likely.) pic.twitter.com/dV5n6dfkSKFebruary annual CPI slows further to 6.8% from 7.4% in January. (Market had been expecting about 7.2%, so RBA rate pause next week now a little more likely.) pic.twitter.com/dV5n6dfkSK
The ABS release included a new series for electricity prices. Power prices were 17.2% higher than in February 2022, with more increases set to come after June after increases of as much as a third take effect.The ABS release included a new series for electricity prices. Power prices were 17.2% higher than in February 2022, with more increases set to come after June after increases of as much as a third take effect.
The biggest contributors to February’s annual increase included the cost of housing, which rose 9.9% from a year earlier. Food and non-alcoholic beverages rose 8%, while rents rose by 4.8%.The biggest contributors to February’s annual increase included the cost of housing, which rose 9.9% from a year earlier. Food and non-alcoholic beverages rose 8%, while rents rose by 4.8%.
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“New dwellings grew 13% in the 12 months to February which is the lowest annual growth since February 2022 as price rises for building materials continue to ease,” the head of prices statistics at ABS, Michelle Marquardt, said.“New dwellings grew 13% in the 12 months to February which is the lowest annual growth since February 2022 as price rises for building materials continue to ease,” the head of prices statistics at ABS, Michelle Marquardt, said.
The Australian dollar fell slightly after the release of the inflation numbers, while stocks erased their modest losses for the day. The moves indicate that investors trimmed their bets on the Reserve Bank lifting its key interest rate next week.The Australian dollar fell slightly after the release of the inflation numbers, while stocks erased their modest losses for the day. The moves indicate that investors trimmed their bets on the Reserve Bank lifting its key interest rate next week.
The inflation figures are the last major piece of data ahead of the RBA board’s meeting next Tuesday. Three of the big four commercial banks expect the RBA will lift its key interest rate for an 11th consecutive meeting, while investors are predicting the central bank will pause for the first time since last April.The inflation figures are the last major piece of data ahead of the RBA board’s meeting next Tuesday. Three of the big four commercial banks expect the RBA will lift its key interest rate for an 11th consecutive meeting, while investors are predicting the central bank will pause for the first time since last April.
There’s some relief on another energy front, though, with automotive fuel prices rising an annual rate of 5.6% last month, the slowest pace in two years. In June last year, fuel costs were rising at annual clip of 43.2% after Russia’s invasion of Ukraine.There’s some relief on another energy front, though, with automotive fuel prices rising an annual rate of 5.6% last month, the slowest pace in two years. In June last year, fuel costs were rising at annual clip of 43.2% after Russia’s invasion of Ukraine.
Automotive fuel prices rose 5.6% in February from a year earlier - well down from the 43% peak of annual increases recorded last June. (Source: @ABSStats ) pic.twitter.com/u8LiaWKGWHAutomotive fuel prices rose 5.6% in February from a year earlier - well down from the 43% peak of annual increases recorded last June. (Source: @ABSStats ) pic.twitter.com/u8LiaWKGWH
Travel and and accommodation rose at annual pace of 14.9% in February. While one of the larger increases, the rate was roughly half that of December when pent-up post-pandemic demand sent prices soaring. Travel and accommodation rose at annual pace of 14.9% in February. While one of the larger increases, the rate was roughly half that of December when pent-up post-pandemic demand sent prices soaring.
The Greens treasury spokesperson, Nick McKim, said the February CPI numbers were “the strongest indication yet that inflation has peaked” and the RBA should now cease lifting borrowing costs.The Greens treasury spokesperson, Nick McKim, said the February CPI numbers were “the strongest indication yet that inflation has peaked” and the RBA should now cease lifting borrowing costs.
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“Next week we will see if the RBA is finally prepared to act in the best interests of Australians instead of blindly following the rest of the world towards a recession.”“Next week we will see if the RBA is finally prepared to act in the best interests of Australians instead of blindly following the rest of the world towards a recession.”
The RBA’s minutes for its 7 March meeting showed board members were prepared to consider a pause in coming months. Since then, there has been financial market turmoil with the failure of Silicon Valley Bank in California and the forced takeover of Credit Suisse by its larger Swiss rival UBS.The RBA’s minutes for its 7 March meeting showed board members were prepared to consider a pause in coming months. Since then, there has been financial market turmoil with the failure of Silicon Valley Bank in California and the forced takeover of Credit Suisse by its larger Swiss rival UBS.
Still, the central banks of the US, the UK and Switzerland persisted with interest rate rises as they considered inflation a bigger threat to their economies than banking troubles.Still, the central banks of the US, the UK and Switzerland persisted with interest rate rises as they considered inflation a bigger threat to their economies than banking troubles.
EY’s chief economist Cherelle Murphy said the February data “provided welcome evidence that domestic services inflation may have peaked after a sharp increase towards the end of last year”. EY’s chief economist, Cherelle Murphy, said the February data “provided welcome evidence that domestic services inflation may have peaked after a sharp increase towards the end of last year”.
Still, “with inflation remaining uncomfortably high, a resilient labour market, and business conditions sitting above pre-Covid levels, there is still a case for further rate hikes”, Murphy said.Still, “with inflation remaining uncomfortably high, a resilient labour market, and business conditions sitting above pre-Covid levels, there is still a case for further rate hikes”, Murphy said.
Brendan Rynne, KPMG Australia’s chief economist, noted that core inflation, excluding volatile-price items, also fell from 7.5% in January to 6.9%. KPMG Australia’s chief economist, Brendan Rynne, noted that core inflation, excluding volatile-price items, also fell from 7.5% in January to 6.9%.
“While today’s data will give the RBA pause for thought, KPMG believes inflation is still sufficiently high and employment too strong for the RBA to call a halt to the cash rate rises just yet,” Rynne said. “We believe, as other main central banks have done this month, the RBA will raise the rate again next week.”“While today’s data will give the RBA pause for thought, KPMG believes inflation is still sufficiently high and employment too strong for the RBA to call a halt to the cash rate rises just yet,” Rynne said. “We believe, as other main central banks have done this month, the RBA will raise the rate again next week.”