Annual inflation steady in Q1 at 2.4pc; above forecast
Sarah Jones
The number: The consumer price index ticked up 0.9 per cent in the three months through March from 0.2 per cent in the December quarter, according to the Australian Bureau of Statistics.
Over 12 months, CPI held at 2.4 per cent. Consensus was for headline inflation to pick up 0.8 per cent for the quarter, and slow to 2.3 per cent year-on-year.
Core inflation – the Reserve Bank’s preferred measure – picked up 0.7 per cent from 0.5 per cent. Annual inflation ticked up 2.9 per cent from an upwardly revised 3.3 per cent in the previous quarter. Why it matters: This is the first time that core inflation is back to the Reserve Bank of Australia’s 2 per cent to 3 per cent target since 2021. What has changed: US president Donald Trump has accelerated a global trade war raising concerns that his policies could cause a recession but also a pickup in inflation. What next: Australian retail sales are due on Friday which will provide insights as to how the consumer is holding up in the face of market turbulence. Australians also head to the polls for the federal election on the weekend.
May rate cut ‘near certainty’ after CPI: State Street
Sarah Jones
Krishna Bhimavarapu of State Street Global Advisors says the quarterly inflation data – which showed headline inflation hold steady at 2.4 per cent – made a rate cut next month a “near certainty”.
Bhimavarapu says the focus is now on whether the Reserve Bank changes its hawkish stance or not.
“While we are not confident that it may happen, we still expect the cash rate to reach 3.1 per cent by December (from 4.1 per cent) as global growth comes under pressure from a prolonged trade conflict between the US and Australia’s biggest trade partner, China.”
