Australian inflation slowed slightly last month, signaling that price pressures might be starting to ease in response to rapid-fire interest rate increases.
The consumer price index (CPI) rose 6.8 percent in the year through last month from 7 percent in the prior month, the Australian Bureau of Statistics said yesterday.
Yet, when volatile items, such as fruit, vegetables and fuel, were excluded, the indicator edged up to 6.2 percent last month from 6.1 percent in July.
“The information released today provides an early indication of September quarter CPI inflation,” Australian Chief Statistician David Gruen said in a statement.
The figures for this month are to come out on Oct. 26, the same day as third-quarter inflation data.
“The slight fall in the annual inflation rate from July to August was mainly due to a decrease in prices for automotive fuel,” as the pace of fuel gains slid to 15 percent last month, from 29.2 percent, Gruen said.
The easing of fuel prices is in line with expectations at the Reserve Bank of Australia (RBA), which is in the midst of its sharpest tightening cycle in a generation. The RBA has raised its cash rate to 2.35 percent from 0.1 percent in five months and said that it expects further hikes ahead.
Australia is tightening in lockstep with policymakers worldwide in an effort to combat escalating consumer price pressures.
The US Federal Reserve has been delivering outsized hikes to try to tackle inflation in the world’s largest economy. Central banks from the UK to New Zealand are also tightening aggressively to rein in prices fueled by massive COVID-19 pandemic-era stimulus, supply-chain disruptions and Russia’s invasion of Ukraine.
Bloomberg Economics had predicted an easing in inflation momentum in July and last month, as key Australian utility bills are delivered this month.
RBA Deputy Governor Michele Bullock has said that the data are unlikely to influence policy deliberation initially, as the board would want to see a number of months of releases to get a handle on them.
Bullock last week told a Bloomberg event that the RBA forecasts inflation to peak at 7.75 percent to 8 percent early next year.
“That’s our current expectation and that’s what we are working with,” she said.
Australia’s central bank meets on Tuesday next week for its policy decision for next month.
The consumer price index rose 6.1 percent in the second quarter from a year earlier.
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