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Australia CPI cools, but sticky inflation keeps September RBA hike in play
Headline inflation slowed to 3.5% year over year in July, while the RBA watched trimmed mean inflation hold at 3.6% and monthly underlying momentum rise to 0.5% in the month.
Australia’s consumer prices eased in July, with headline CPI falling to 3.5% year over year from 3.8%, but still above expectations of 3.2%, Action Forex reports. On a monthly basis, CPI rose 1.0% after a -0.1% drop in June, slightly above the 0.9% forecast.
The more policy-relevant detail was underlying inflation. The trimmed mean CPI held at 3.6% year over year, above a 3.5% consensus, while monthly trimmed mean inflation accelerated to 0.5% from 0.3%, compared with expectations for another 0.3% increase.
Action Forex also pointed to continued cost pressure across categories, including housing, which rose 5.0% year over year, and transport inflation that jumped from 0.1% to 1.6% year over year, with automotive fuel up 7.5% month over month.
With the RBA focused on sticky underlying inflation, the July data add support to the view that further tightening remains possible, keeping a September decision “firmly live,” the outlet wrote.