Australian inflation remained unchanged yearly however got here in stronger than anticipated on a quarterly foundation, reinforcing market expectations for a second price minimize by the Reserve Financial institution of Australia (RBA) at its Could assembly however a extra measured strategy afterwards.
Whereas annual inflation remained anchored inside the 2-3% goal vary and core measures confirmed indicators of easing, the quarterly studying prompt some lingering value pressures within the economic system.
Key Takeaways:
- Headline CPI held regular at 2.4% year-on-year in March quarter, matching the December quarter studying however above the two.2% forecast
- Quarterly inflation jumped to 0.9%, considerably larger than the 0.2% recorded in December
- Trimmed imply (core) inflation eased to 2.9% yearly from 3.3%, in keeping with expectations
- The RBA’s goal band for inflation is 2-3%, with present readings now comfortably inside this vary
- Increased quarterly figures have been pushed by electrical energy (+16.3%), training (+5.2%), and housing (+1.7%)
The quarterly leap in inflation was largely pushed by particular elements together with a 16.3% rise in electrical energy costs as rebate applications expired, a seasonal 5.2% improve in training charges, and a 1.7% rise in housing prices led by rental costs.
Providers inflation, which has been a persistent concern for central banks globally, moderated to three.7% yearly from 4.3% within the December quarter, marking the bottom studying since June 2022.
Annual items inflation crept as much as 1.3% from 0.8%, reflecting some value will increase in meals and non-alcoholic drinks, which rose 3.2% year-on-year.
Hyperlink to Australia’s CPI Report (March 2025 Quarter)
Market Reactions
Australian Greenback vs. Main Currencies: 5-min
Overlay of AUD vs. Main Currencies Chart by TradingView
The Australian greenback strengthened broadly following the CPI launch, with merchants viewing the information as confirming the case for an additional RBA price minimize whereas not suggesting any want for aggressive easing. The foreign money gained roughly 0.4% towards the US greenback, with comparable positive aspects towards different main currencies.
After a little bit of consolidation following the preliminary pop larger, AUD/USD posted a 0.41% lead on what seems to be one other bullish wave hours after the discharge whereas AUD/JPY led the positive aspects with a 0.62% rise. The Australian greenback additionally strengthened noticeably towards European currencies, with EUR/AUD down 0.62% and GBP/AUD falling 0.49%.
