Australia's CPI Inflation Was 6% In June; Chances Of RBA Pause Increases
We finally have the Australian CPI data results, showing that the index's growth was way lower than expected in the 2nd quarter. This will increase the chances of a pause in the RBA's rate hike cycle.
Overall, a 0.8% growth in Australia's CPI inflation was recorded when compared with the previous quarter. On the contrary, the experts were forecasting a 1% growth in CPI inflation. Similarly, the 1st quarter CPI inflation was also around 1.4% which tells us that the inflation has slowed down.
Inflation At Yearly Lows
Overall, the CPI reading from Australia is at a multi-year low, as such values were only last seen on September 2021. This will also give ample room for the RBA to take a pause, as any further rate hikes will affect local consumption.
After the recent reading, the CPI inflation of Australia now stands at 6% on a yearly basis which is higher than the expectations of 5.4%. However, it is still lower than the 7% value seen during the 1st quarter.
According to experts, the CPI reading was soft which is an indication that the interest rates introduced by the RBA are now bearing fruit. This has also strengthened the case for a pause in the rate hikes.
After the CPI reading, the Australian Dollar (AUD) slipped by 0.7% now that the chances of more rate hikes have become very slim. Just a month ago, the RBA decided to keep the interest rates unchanged which disappointed many market players.
Although the recent quarter's inflation was soft, the annual inflation in Australia is still higher than the 2% target of the RBA. For starters, the swelling and the rent costs in Australia are still high along with high mortgage rates as well.
Looking ahead, the RBA will likely follow a wait-and-see approach as it tries to assess the effects of rate hikes on inflation.