Australia CPI grows more than expected in July, core inflation eases
2024.08.27 21:49
Investing.com– Australia consumer price index inflation grew more than expected in July amid sticky fresh food costs, although softer housing and energy costs spurred a small decline in core inflation.
But the reading still fed into persistent concerns that the Reserve Bank could raise rates further to quash stubborn inflation.
grew 3.5% year-on-year in July, data from the Australian Bureau of Statistics showed on Wednesday. The reading was higher than expectations of 3.4% but eased from the 3.8% seen in the prior month.
Core CPI inflation, which excludes volatile items such as fuel, fresh food and holiday spending, fell to 3.7% in July from 4% in the prior month.
The increase in headline inflation was driven chiefly by higher fresh food prices, with housing costs retreating slightly from the prior month. Electricity rebates also helped ease energy costs.
Still, July’s reading showed inflation still remained comfortably above the RBA’s 2% to 3% annual target, with the bigger-than-expected reading in headline CPI also spurring more concerns over higher interest rates.
The inflation data comes just weeks after RBA officials warned that the bank could still raise interest rates further to combat sticky inflation. The minutes of the central bank’s August meeting also showed that policymakers had considered a potential rate hike.
Analysts expect the central bank to keep rates higher for longer, and to begin cutting rates later in 2025.
The rose 0.2% after the inflation reading, while the stock index sank 0.7%.
