Inflation rate holds steady, defying expectations
Australia’s headline inflation rate has held steady at the midpoint of the Reserve Bank’s target range, defying expectations of a rise in the consumer price index.
The CPI remained at 2.5 per cent in the month of January, the Australian Bureau of Statistics reported on Wednesday.
It broke a streak of two successive rises in the index from its 2.1 per cent low in September and October 2024.
ABS head of prices statistics Michelle Marquardt said the largest contributors to annual price growth were food and non-alcoholic beverages, housing and alcohol and tobacco.
The result was below the consensus expectations of analysts, who had pencilled in CPI to edge up to 2.6 per cent, given the roll off of electricity rebates for some consumers in Queensland.
“The Queensland government introduced a one-off electricity rebate of $1000 from July 2024,” Marquardt said.
“The impact of the rebates was lower in January than December as some households had exhausted the full value of the rebate.”
Trimmed mean inflation, the central bank’s preferred inflation gauge, rose from 2.7 per cent to 2.8 per cent on an annualised basis.
The monthly index is not as closely watched by the RBA as the quarterly figure. But with the ABS not due to release the March quarter print until April 30, four weeks after the board’s next meeting, it will provide forecasters a sense of what to expect.
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The central bank was contented enough that inflation was moving sustainably to target to cut rates for the first time in more than four years earlier in February.
But a hawkish RBA governor Michele Bullock said the battle against inflation was not yet won, and more progress in the data was needed before they could be convinced to cut further
“One learning from overseas is that disinflation can be bumpy, it doesn’t go in a straight line back to target,” Ms Bullock told a parliamentary hearing on Friday.
“The board remains cautious about the prospects for further policy easing.”
