<\/p>\n
(Bloomberg) — A gauge of Australia\u2019s monthly inflation accelerated in August to the top of the Reserve Bank\u2019s 2-3% target, supporting the case for interest rates to remain on hold and sending the currency higher.<\/p>\n
The Consumer Price Index indicator climbed 3% from a year earlier, the highest reading in a year, driven largely by housing costs, official data showed Wednesday. That compared with economists\u2019 forecast for a 2.9% gain.<\/p>\n
Most Read from Bloomberg<\/p>\n
The RBA\u2019s favored trimmed mean measure, which smooths out volatile items such as food and energy, slowed to 2.6% in August from 2.7% in the prior month.<\/p>\n
The data, together with last week\u2019s employment report showing ongoing tightness in the labor market, are likely to encourage RBA policymakers to stand pat at next week\u2019s meeting and maintain a cautious outlook.<\/p>\n
The currency erased losses to rise 0.3% and policy-sensitive three-year government bond yields climbed as traders pared expectations for the next rate cut. RBA meeting-linked swaps indicate the central bank will pause borrowing costs at its Sept. 29-30 meeting, with a 55% chance of a reduction in November.<\/p>\n
The result \u201cis flashing warning signals for the RBA, showing broad-based re-acceleration in inflationary pressures,\u201d Barrenjoey Markets Pty Ltd. economists including Jo Masters said, scrapping their call for a November rate cut.<\/p>\n
\u201cThere is now considerable uncertainty about the path to future rate cuts,\u201d Masters said. \u201cOn balance, we think it likely that the RBA will have room to deliver a 25bp cut in H1-26, although the timing is uncertain.\u201d<\/p>\n
<\/p>\n
Wednesday\u2019s data showed that housing was among the largest contributors to the annual movement, driven by power prices. Others were food and alcohol.<\/p>\n
What Bloomberg Economics Says…<\/p>\n
\u201cA second unexpectedly-strong monthly inflation reading won\u2019t derail the RBA\u2019s easing cycle, but it should douse expectations of a rate cut at the Sept. 30 meeting. It reinforces our view that the pace of cuts will be gradual.\u201d<\/p>\n
\u2014 James McIntyre, economist.<\/p>\n
Read the full note here.<\/p>\n
The RBA cut its cash rate by a quarter-percentage point to 3.6% last month, its third reduction of the year. On Monday, Governor Michele Bullock said the rate-setting board will weigh recent evidence showing the economy has been performing in line with or slightly stronger than anticipated at next week\u2019s policy meeting.<\/p>\n
Bullock said that inflation has eased substantially to be inside the RBA\u2019s target and reiterated that the monthly CPI indicator is volatile and doesn\u2019t provide a clean signal. She has expressed greater confidence in the comprehensive quarterly inflation report.<\/p>\n
on<\/p>\n
Wednesday\u2019s figures also showed:<\/p>\n
Electricity costs rose 24.6% in the 12 months to August, driven by households in Queensland, Western Australia and Tasmania having higher out-of-pocket costs<\/p>\n
Rents rose 3.7% in August, the weakest annual growth since November 2022<\/p>\n
New dwelling prices, which capture new builds and major renovations, rose 0.7% in the 12 months to August compared with a 0.4% rise in July as builders increased prices and reduced discounts and promotional offers in some cities<\/p>\n
Meals out and takeaway rose 3.3%, the strongest annual rise in the past year, led by higher costs of labor and ingredients<\/p>\n
Inflation in holiday travel and accommodation prices eased after a drop in demand following the July school holidays<\/p>\n
Insurance prices recorded the smallest annual growth in over four years<\/p>\n
\u201cHeadline topped expectations and details such as housing and services remain a source of upside risk for the outlook,\u201d said Rodrigo Catril, a strategist at National Australia Bank in Sydney. Today\u2019s figures provide some \u201cfood for thought for the RBA to consider a pause at its November meeting.\u201d<\/p>\n
The ABS will begin publishing a complete monthly measure of inflation from Nov. 26, addressing a long-standing gap in Australia\u2019s economic data. The development will bring the nation in line with most of its developed-world peers.<\/p>\n
Still, it\u2019s expected there will be a transition period for the complete monthly inflation data, suggesting the quarterly figure will remain the benchmark for some time yet.<\/p>\n
–With assistance from Matthew Burgess and Garfield Reynolds.<\/p>\n
(Updates market reaction, adds comment from analyst.)<\/p>\n
Most Read from Bloomberg Businessweek<\/p>\n
\u00a92025 Bloomberg L.P.<\/p>\n","protected":false},"excerpt":{"rendered":"(Bloomberg) — A gauge of Australia\u2019s monthly inflation accelerated in August to the top of the Reserve Bank\u2019s…\n","protected":false},"author":2,"featured_media":40264,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[85,902,138,14564,219,36464,111,139,69],"class_list":{"0":"post-40263","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-australia","9":"tag-bloomberg","10":"tag-business","11":"tag-consumer-price-index","12":"tag-economy","13":"tag-jo-masters","14":"tag-new-zealand","15":"tag-newzealand","16":"tag-nz"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/40263","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=40263"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/40263\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/40264"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=40263"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=40263"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=40263"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}