Australia inflation slows to 3-1/2 year low, but sticky core to push RBA cut to 2025
Headline CPI at 2.8% in Q3, back in RBA's target band of 2-3%
Core sticky at 3.5%, services inflation picks up
Data supports view of 2025 rate cuts; muted reaction in markets
Adds Woolworths' earnings result, bullets and picture
By Stella Qiu
SYDNEY, Oct 30 (Reuters) -Australian consumer price inflation slowed to a 3-1/2 year low in the third quarter, though the core measure was still sticky and reinforced market wagers that the central bank won't start cutting rates until next year.
Overall, the report was rather mixed, with consumers benefiting from government rebates on electricity and a drop in petrol, while services price pressures persisted.
That kept market reaction muted, with the Australian dollar AUD=D3 edging up 0.1% to $0.6569, while three-year bond futures YTTc1 slipped 1 tick to 96.06.
Investors slightly pared the chance of a rate cut from the Reserve Bank of Australia this December and next February to just 26% and 42%. Markets still see April next year as the most likely timing for the first easing. 0#RBAWATCH
Data from the Australian Bureau of Statistics on Wednesday showed the consumer price index (CPI) rose 0.2% in the third quarter, under forecasts of a 0.3% increase.
Annual inflation dropped to 2.8%, from 3.8%, taking it back into the RBA's 2-3% target band for the first time since 2021, a result that was largely expected.
The slowdown was driven by a 17.3% drop in electricity prices due to the government's subsidies, while petrol fell 6.2% in the quarter.
Policymakers are more focused on core inflation and the trimmed mean measure increased by 0.8% in the quarter, just above forecasts of a 0.7% gain. The annual pace though slowed to 3.5% from 4.0%.
"The ABS data shows that the price pressures that remain in the economy like rents, insurance premiums, and medical services, are predominately supply-side issues," said Stephen Smith, Deloitte Access Economics partner.
"These cannot be subdued by further increases to the cash rate, supporting our view that interest rate hikes have done their job in slowing the economy and quashing demand-led inflation."
Services inflation remains a source of concern for the RBA, staying elevated at 4.6% in the third quarter, slightly higher than the June quarter's 4.5%, and little changed over the past 12 months.
The central bank will have an updated set of economic forecasts when it decides on its next policy move on Tuesday.
The slow easing in inflation had Australian grocer Woolworths WOW.AX warning on Wednesday that earnings from its food division may fall as price-conscious consumers hunt for bargains.
POSITIVE IMPULSE
For September alone, CPI rose a muted 2.1% compared with a year earlier, the lowest since July 2021. The trimmed mean measure slowed to 3.2%, just a touch above the top of the target band.
The RBA has held its policy steady since November, judging the current cash rate of 4.35% - up from 0.1% during the pandemic - is restrictive enough to bring inflation to its target band of 2-3% while preserving employment gains.
The labour market has stayed surprisingly resilient, an argument against early rate cuts. But the easing in annual core inflation comes ahead of the RBA's projection for it to slow to 3.5% by the end of the year.
"Although quarterly trimmed mean CPI is not yet rising at pace consistent with the RBA’s target range, we think it will do so before long," Abhijit Surya, Australia and New Zealand Economist at Capital Economics.
"That should pave the way for the Bank to begin easing policy at its meeting next February," said Surya.
Reporting by Stella Qiu
Editing by Shri Navaratnam
免责声明: XM Group仅提供在线交易平台的执行服务和访问权限，并允许个人查看和/或使用网站或网站所提供的内容，但无意进行任何更改或扩展，也不会更改或扩展其服务和访问权限。所有访问和使用权限，将受下列条款与条例约束：(i) 条款与条例；(ii) 风险提示；以及(iii) 完整免责声明。请注意，网站所提供的所有讯息，仅限一般资讯用途。此外，XM所有在线交易平台的内容并不构成，也不能被用于任何未经授权的金融市场交易邀约和/或邀请。金融市场交易对于您的投资资本含有重大风险。
所有在线交易平台所发布的资料，仅适用于教育/资讯类用途，不包含也不应被视为用于金融、投资税或交易相关咨询和建议，或是交易价格纪录，或是任何金融商品或非应邀途径的金融相关优惠的交易邀约或邀请。
本网站上由XM和第三方供应商所提供的所有内容，包括意见、新闻、研究、分析、价格、其他资讯和第三方网站链接，皆保持不变，并作为一般市场评论所提供，而非投资性建议。所有在线交易平台所发布的资料，仅适用于教育/资讯类用途，不包含也不应被视为适用于金融、投资税或交易相关咨询和建议，或是交易价格纪录，或是任何金融商品或非应邀途径的金融相关优惠的交易邀约或邀请。请确保您已阅读并完全理解，XM非独立投资研究提示和风险提示相关资讯，更多详情请点击 这里。
