Already a subscriber?Investors have pushed back the timing for the Reserve Bank of Australia’s first interest rate cut until December 2025 after price growth accelerated for a second straight month, prompting economists to warn inflation has stopped falling.
While the monthly consumer price index is volatile, the figures highlighted the persistence of Australia’s inflation outbreak, with headline inflation entrenched at about 3.5 per cent since December and underlying inflation stuck close to 4 per cent.“The disinflationary process in Australia appears to have stalled out so far this year after encouraging declines over 2023,” BetaShares chief economist David Bassanese said.
Underlying inflation was unchanged in April at elevated levels. Excluding holiday travel and volatile items such as fruit and fuel, inflation was 4.1 per cent. While annual headline inflation has changed little for months, economists expect it to fall sharply when federal and state government electricity rebates come into effect from July., which include a $300 subsidy from the federal government and a $1000 rebate for Queenslanders, will cause electricity prices to fall 20 per cent in the September quarter, subtracting 0.5 percentage points from CPI.
Business Council chief economist Stephen Walters said the inflation figures would be “ringing alarm bells down at the RBA” and meant a rate rise could no longer be ruled out. Disinflation in the cost of home building has stalled at an annual rate of about 5 per cent, due in part to a substantial pipeline of state government infrastructure projects, which are putting upward pressure on building material and labour costs.
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