Australia CPI Inflation Report

Investing.com reports that Australia’s consumer price index (CPI) inflation grew more than expected in July due to persistent fresh food costs, despite a slight decline in core inflation driven by lower housing and energy costs.

Key Highlights

• CPI inflation increased by 3.5% year-on-year in July, above the expected 3.4% but down from 3.8% the previous month.
• Core CPI inflation fell to 3.7% in July from 4% in June, excluding volatile items like fuel and fresh food.
• The rise in headline inflation was primarily attributed to higher fresh food prices, although housing costs showed a slight decrease. Moreover, electricity rebates contributed to easing energy costs.
• Despite the decline in core inflation, the overall inflation rate remains above the Reserve Bank of Australia’s (RBA) target range of 2% to 3%.
• Recent inflation readings heightened concerns regarding potential further rate hikes by the RBA, as mentioned in officials’ warnings in the preceding weeks and the minutes from the August meeting.
• Analysts foresee the central bank maintaining high rates for an extended period, potentially starting to cut rates later in 2025.
• Following the inflation data, the Australian dollar rose by 0.2%, while the ASX 200 stock index fell 0.7%.