Australia’s inflation rate slowed less than expected in the March quarter, dimming hopes the cost of living crunch was easing and chances of a 2024 cut in official interest rates.
The consumer price index for the first three months of 2024 was 3.6%, slowing from the 4.1% annual pace in the December quarter, the Australian Bureau of Statistics said on Wednesday. Economists had tipped CPI would drop to 3.5%.
The March quarterly inflation rate was 1%, compared with the 0.6% pace in the December quarter. Economists had tipped it would rise to 0.8%.
The country’s inflation rate has been falling since it hit a peak at the end of 2022, driven lower in part by the sharpest increase in official interest rates in three decades.
The Reserve Bank’s board will analyse the latest data closely when it meets on 6-7 May. Prior to today’s data release, investors were rating only a sliver of a chance of an RBA rate cut next month, with markets fully pricing in a 25-basis point reduction in the cash rate by February 2025.
The federal budget, to be released on 14 May, will also be shaped by the inflation figures. The Albanese government will likely argue its spending won’t stoke inflation pressure and delay any interest rate cut by the central bank.
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