"It's a bit of a mixed bag really. A middle of the road inflation outcome doesn't really scream ‘rate cut' to me"
- Stephen Walters, JPMorgan Chase & Co.'s chief economist
Consumer prices pressure in Australia came in short of expectations for a third quarter in row, adding more pressure on the Reserve Bank of Australia to cut rates in August as mining investment is approaching its peak. Figures from the Australian Bureau of Statistics showed consumer prices rose 0.4% in April-June, compared with the preceding quarter, when they advanced 0.5%. At the same time, consumer prices were up 2.4% annually as the economy transitions away from a decade-long boom led by commodities spending.
Report also showed the core inflation rate jumped 0.5% from the previous quarter, meeting analysts' expectation, while the weighted-average measure of inflation, a second core gauge that excludes the largest price ups and downs, increased 0.7% above estimates of a 0.5% gain. The figures were mixed as falls in costs of domestic holiday travel and accommodation and petrol were offset by gains in medical and hospital prices, as well tobacco, furniture and home purchases. It leaves the door open for the RBA for further cuts soon, as the inflation outlook may provide some scope for more easing. In July the Reserve Bank of Australia left its monetary policy on hold, saying the depreciation in Aussie may continue as well as rock-bottom borrowing costs are likely to bolster the local economy further.
© Dukascopy Bank SA