Australia’s consumer price inflation moderated to an eight-month low in February adding weight to the expectations that the Reserve Bank will pause its interest rate hike next week.
Consumer prices grew at a slower pace of 6.8 percent after a 7.4 percent gain in January, the Australian Bureau of Statistics reported Wednesday.
The rate was the lowest since June 2022 when it was at the same level. Prices were expected to climb 7.1 percent in February.
“This marks the second consecutive month of lower annual inflation, also known as ‘disinflation’, from the peak of 8.4 percent in December 2022,” ABS Head of Prices Statistics Michelle Marquardt said.
Excluding volatile items, inflation weakened to 6.9 percent from 7.5 percent in January.
Housing, food and non-alcoholic beverages and transport posted the most significant increases. Cost of housing advanced 9.9 percent and food and non-alcoholic beverages prices climbed 8.0 percent.
At the same time, automotive fuel prices increased 5.6 percent. While fuel prices drove the increase in transport, annual growth for fuel is the lowest it has been in two years, the ABS said.
The further notable slowdown in inflation coupled with the softness of consumption will probably prompt the Reserve Bank of Australia to pause its tightening cycle next week, Capital Economics’ economist Marcel Thieliant said.
The RBA had raised its benchmark rate by a cumulative 350 basis points since May 2022. At the last meeting in February, the rate was lifted by a quarter point to 3.60 percent, the highest in more than ten years.
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