Encouraging inflation statistics might provide relief to borrowers weary of potential rate hikes next month, though economists caution that more challenges may still lie ahead.
This morning, fresh data from the Australian Bureau of Statistics (ABS) revealed that the headline inflation rate has decreased to 4.2 percent over the 12 months leading to April, down from 4.6 percent.
Meanwhile, the trimmed mean, the Reserve Bank’s preferred gauge of core inflation, experienced a slight increase, reaching 3.4 percent in the year to April, up from 3.3 percent over the previous year ending in March.
Australia’s inflation rate currently surpasses those in the UK, US, Canada, New Zealand, the European Union, and Japan.
This situation persists even though Australia has implemented the highest cash rate and has enacted three consecutive rate increases this year.
Sally Tindall, director of data insights at Canstar, humorously noted that inflation has proven to be “stickier than a toffee apple.”
“In the last 12 months, the only moves it’s made were in the wrong direction,” she said.
“If the (RBA) board does pause in June, it won’t signal the end of the hikes.
“If the current cash rate setting doesn’t get inflation moving back in the right direction, the RBA will have no option but to ratchet up the pressure even further.”
All big four banks are forecasting the Reserve Bank to hold interest rates at its next meeting in June.
ANZ and Commonwealth Bank are forecasting no more increases for the rest of the year, while Westpac has predicted two more hikes and NAB one more.
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