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Shoppers and pedestrians navigate through Rundle Mall in Adelaide, Australia, as they pass by a Shiels store on Thursday, February 11, 2021.
Australia’s first-quarter inflation has seen an increase of 2.4% compared to the same quarter last year, marking a four-year low.
This figure surpassed the expectations set by Reuters, which estimated a 2.3% rise, remaining unchanged from the previous quarter’s 2.4% increase.
The Australian Bureau of Statistics reported that the most notable price increases during this period were observed in sectors such as housing, education, and food and non-alcoholic beverages.
These hikes were notably mitigated by a decline in the costs associated with recreational and cultural activities, as well as furnishings and household services.
Inflation in Australia has shown a pattern of softening after reaching a multi-year peak of 7.8% at the end of December 2022, with the overall inflation rate decreasing in seven of the past nine quarters.
This trend of declining inflation has provided the Reserve Bank of Australia with the opportunity to reduce interest rates, bringing them down to 4.1% from a peak of 4.35%, the highest since December 2011.
Looking ahead to 2025, the RBA predicts an uptick in economic growth and a robust labor market; however, it noted the uncertainty surrounding global conditions, as stated in its report.
In a note dated April 22, Stephen Wu, a senior economist at the Commonwealth Bank of Australia, projected that trimmed mean inflation—reflecting ordinary fluctuations in consumer goods and services—would increase by 0.6% quarter-on-quarter, leading to an annual rise of 2.8%.
“Should the trimmed mean CPI align with our forecast or fall below it, we view a rate cut in May as virtually certain,” Wu remarked.
Trimmed mean inflation in the first quarter showed a 0.7% increase on a quarterly basis and a 2.9% rise year-on-year, slightly exceeding Wu’s estimates.
This release of economic data coincides with Australia preparing for an election on May 3, where all 150 seats in the lower House of Representatives and 40 of the 76 Senate seats are contested.
As reported by Reuters, citing Newspoll, on April 28, the Labor Party, led by current Prime Minister Anthony Albanese, is currently enjoying a four-point advantage over the conservative Liberal-National coalition when accounting for the redistribution of votes from smaller parties.
— This is breaking news; please check back for updates.
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