Up next
Author
Share this @internewscast.com
FacebookXRedditPinterest
A drop in Australia’s headline inflation has not eliminated the possibility of a February interest rate hike, according to some economists.
The annual consumer price index (CPI) dipped from 3.8 to 3.4 per cent in November, according to Australian Bureau of Statistics data released on Wednesday.
That was lower than headline figure of 3.6 per cent economists had forecast.
But the RBA places greater emphasis on the trimmed mean or underlying measure of inflation, after removing volatile items, which remains too high.
Trimmed mean inflation fell from 3.3 per cent to 3.2 per cent after rising 0.3 per cent month to month. The figure is above the RBA’s two to three per cent target band, but is consistent with their November forecast.

The Reserve Bank of Australia (RBA) is keeping a close eye on the upcoming December quarter inflation report, which is set to be released on January 28. This report is crucial as it arrives just days before the RBA’s board meeting scheduled for February 2-3.

AMP Chief Economist Shane Oliver says the RBA will be concerned by stickier items like the cost of building a new home, which is “accelerating”.
“New dwelling inflation was up 2.8 per cent on a year ago, compared to 1.7 per cent in October on a year ago,” he told SBS News.
“So that’s still a red flag there with new dwelling construction prices, which are continuing to pick up pace, so that will concern the RBA.”

Economic analyst Holden noted that while market services prices have not increased, they remain stubbornly high at around 3 percent. This persistent inflationary pressure may lead the RBA to consider an interest rate hike, which Holden suggests is still a possibility.

Holden believes that the inflation data from the December quarter will serve as a more accurate indicator for the RBA’s decisions during their February meeting.
Richard Holden, Scientia Professor of Economics at UNSW Business School, said the inflation data showed the cost of items still went up, but the growth had slowed slightly.
“I think it’s telling us that inflation is still too high,” he told SBS News.
“The RBA are going to have to do something to get it under control. And today’s figures don’t change that.”

Australian Treasurer Jim Chalmers expressed his approval of the latest Consumer Price Index (CPI) data, which exceeded economists’ expectations. He acknowledged the ongoing financial challenges facing Australians, yet described the CPI results as “very welcome and very encouraging.”

“It certainly could, and a lot of economists are suggesting that rates will need to go up. So if you thought that they were going to go up before this number, I wouldn’t change my mind,” he said.
Oliver, relieved by the drop, predicts a hold but admits “they’re not great numbers”.
“They’re still too high. The Reserve Bank will still be nervous. It keeps alive the prospect of a rate hike in February,” Oliver said.

He said the December quarter CPI figures will be a better predictor for the RBA’s February meeting.

A man wearing a black suit

Treasurer Jim Chalmers welcomes the CPI data, which was better than economists predicted. Source: AAP / Lukas Coch

Treasurer Jim Chalmers said while he understood Australians were still feeling the pinch of competing costs, the CPI results were “very welcome and very encouraging”.

“We know that households are still under pressure and that’s why our responsible cost of living relief is so important,” he said in a statement.
“Inflation remains much lower than we inherited from the Coalition but still higher than we would like.”
Stephen Smith, partner at Deloitte Access Economics, highlighted that the new data comes with “wide margins of error”.
He said the RBA should be “careful and cautious, rather than impulsive”, arguing a cash rate increase would be “premature”.
“If the RBA feels it has no choice to hike rates, then it is a sad indictment on the failure of policymakers to address the root causes through reform.”
Following its decision, the central bank’s governor Michele Bullock said it was unlikely there would be further interest rate cuts “for the foreseeable future”.

— With additional reporting by the Australian Associated Press.

Share this @internewscast.com
FacebookXRedditPinterest
You May Also Like
A couple's drive to the airport has taken a shocking turn after their hire car fell into a large sinkhole in Adelaide.

Adelaide Airport Drama: Couple’s Hire Car Swallowed by Sinkhole En Route to Departure

A couple’s drive to the airport has taken a shocking turn after…
Childcare centre shut down in Sydney for failing to meet standards

Sydney Childcare Centre Closed Due to Non-Compliance with Standards

A Sydney childcare centre is the first to be shut down amid…

Preparing for Pet Loss: Developing a Grief Plan for Your Beloved Canine Companions

Furry friend or public pest? Not everyone wants to be pawed by…

Nobel Committee Clarifies Prize Rules Following Machado’s Proposal to Transfer Award to Trump

Nobel Peace Prize winner Maria Corina Machado has engaged in conversations about…
An out-of-control blaze in Longwood has burnt through more than 48,000 hectares.

Tragic Discovery: Body Uncovered in Fire-Ravaged Region of Victoria

In a tragic development amidst the relentless Longwood bushfire, authorities have discovered…
Hundreds dead in mass Iran protests, activists say

Activists Report Hundreds Killed Amid Ongoing Protests in Iran

A crackdown on nationwide protests in Iran has killed at least 538…
Anthony Albanese visited a bushfire-hit area in Victoria.

Immediate Disaster Relief Payments Announced for Victoria Bushfire Victims in Australia

Prime Minister Anthony Albanese and Premier Jacinta Allan made their way to…

Unequal Impact: How Heatwaves Highlight Disparities in Suburban Areas

Parts of the country have been sweltering through a heatwave that’s set…
A family is grateful to be alive after they were forced to huddle together inside a shipping container as flames tore through their home.Isabel Bafunno, 81, said they tried to put out the fire when it reached their remote Caveat property in Victoria, but "it was hopeless".

From Devastation to Innovation: Family Transforms Shipping Container into New Home After Fire

A family narrowly escaped disaster as they huddled inside a shipping container…
Known as the 'Island in the Currents' or the 'Island of the Bards,' Bardsey Island is the fourth largest offshore island in Wales

Dream Job Alert: Live and Work on a Charming UK Island with Only Three Neighbors!

Off the coast of North Wales, about two miles from the Llyn…
Sendle shuts down

Parcel Delivery Company Sendle Abruptly Ceases Operations

Australian parcel and courier service Sendle has suddenly ceased operations, leaving small…

Shocking Road Rage Incident: Prominent Muslim Leader and Wife Victims of Alleged Assault in Melbourne

In a disturbing incident near Melbourne, an imam and his wife were…