The consumer prices index gained 0.5 percent from the first quarter, when it advanced 0.1 percent, the Bureau of Statistics said. Annual core inflation was 4.2 percent, which is above the central bank’s target range of 2 percent to 3 percent.
Traders raised bets on the size of future interest-rate increases after today’s report showed costs rose for health care, household contents and clothing. Australia’s economy was one of few including China to expand in the first quarter, helped by Governor Glenn Stevens’ decision to slash borrowing costs to a 49-year low of 3 percent.
Health costs rose 2.3 percent in the second quarter and prices of household contents and services advanced 2.2 percent, today’s report showed. By contrast, banking services charges fell 1.7 percent and food slipped 0.9 percent. The annual headline inflation rate slowed to 1.5 percent from 2.5 percent.
The Reserve Bank’s core inflation measures, which exclude the largest price increases and declines, were also published today. The weighted-median gauge of inflation advanced 0.8 percent in the quarter for an annual increase of 4.2 percent, the eighth quarter that the measure has held above the Reserve Bank’s target range.
Governor Stevens and his board left the overnight cash rate target at 3 percent on July 7 for a third month after cutting it by a record 4.25 percentage points between September and April.