Australian consumer inflation showed signs of slowing in the three months to June, with an annual rate of 6.0%, down from 7.0% in the previous March quarter. Despite this decrease, concerns remain at the Reserve Bank about the persistent rise in costs across the economy.
The Australian Bureau of Statistics reported that core inflation also eased to an annual 5.9% on a trimmed mean basis, compared to 6.6% in the three months to March.
Following the release of the CPI data at 11.30 am, the Australian dollar fell to around 67.50 US cents, while the ASX 200 rose to a five-month high. Share prices initially surged but later eased, as economists speculate that the central bank may postpone raising interest rates at next week’s meeting.
However, the Reserve Bank of Australia faces a close decision as it assesses the data and upcoming producer prices for the June quarter, as well as taking into account the rate decision from the US Federal Reserve.
The data reveals a trend of easing inflation, as the monthly inflation indicator showed a rise of 5.4% in the year to June, with notable increases in housing, food, non-alcoholic beverages, and recreation and culture costs, offset by a sharp drop in petrol prices.
The rise of 0.8% in the June quarter Consumer Price Index, down from the March quarter’s 1.4%, indicates a slowdown in CPI inflation, with some offsetting price falls in domestic holiday travel and accommodation, and automotive fuel costs.
Michelle Marquardt, the head of prices statistics at the ABS, stated that although prices continued to rise for most goods and services, there were some areas with price falls, including domestic holiday travel and accommodation, and automotive fuel.
She noted that the most significant contributors to the rise in the June quarter were rents, international holiday travel and accommodation, other financial services, and a 1% increase in new dwellings purchased by owner-occupiers. Rents recorded the strongest quarterly rise since 1988 due to a tight rental market.
Food prices rose 1.6% in the quarter, driven by increases in meals out and takeaway foods, fruit and vegetables, and bread and cereal products.
However, there was some relief for consumers with price falls observed in domestic holiday travel and accommodation (down 7.2%), electricity (down 1.8%, but expected to rise sharply in the next quarter along with gas prices), clothing accessories (down 2.2%), and automotive fuel (-0.7%).