Australia Q2 Inflation Rate Stronger than Expected


The annual inflation rate in Australia rose to 1.6 percent in the June quarter 2019 from a 2-1/2-year low of 1.3 percent in the previous period. The latest CPI reading was above market consensus of 1.5 percent, as food inflation hit its highest in nearly five years while transport prices picked up strongly.

Year-on-year, prices of food and non-alcoholic beverages increased by 2.4 percent in the second quarter, following a 2.3 percent rise in the prior quarter. It was the highest food inflation since the September quarter 2014, amid further rises in prices of meat and seafoods (4.2 percent, the same as in Q1), dairy and related products (1.7 percent vs 1.2 percent), and fruits and vegetables (5.6 percent vs 5.8 percent). 

In addition, transport prices picked up significantly (1.7 percent vs flat reading in Q1), of which vehicles (3.4 percent vs -0.1 percent) and automotive fuels (-0.5 percent vs -3.5 percent). Additional upward pressure came from: recreation and culture (1.8 percent vs 0.9 percent); clothing and footwear (0.2 percent vs -0.1 percent); alcohol and tobacco (5.9 percent vs 6.4 percent); housing (0.5 percent vs 0.8 percent), amid a sharp slowdown in cost of new dwelling purchase by owner-occupiers (0.2 percent vs 1.2 percent); health (3 percent vs 3.1 percent); education (2.8 percent vs 2.9 percent); and insurance and financial services (0.9 percent vs 1.1 percent). Meanwhile, cost fell further for both communication (-4.4 percent vs -4.6 percent) and furnishings, household equipment and services (-0.4 percent vs -0.8 percent). 

RBA Trimmed Mean CPI rose 1.6 percent year-on-year in the three months to June, the same pace as in the previous quarter and above market forecasts of 1.5 percent. Quarter-on-quarter, the index advanced 0.4 percent, following a 0.3 percent gain in the March quarter and matching market estimates. RBA Weighted Mean CPI went up 1.2 percent year-on-year, also the same as in the first quarter and in line with forecasts.

On a quarterly basis, consumer prices increased by 0.6 percent in the June quarter, after being unchanged in the previous three months and compared to expectations of 0.5 percent. This was the highest quarterly inflation rate in 1-1/2 years, amid higher automotive fuel prices (10.2 percent), which returned to levels recorded in late 2018 and contributed half of the 0.6 percent rise this quarter. In addition, prices rose for medical and hospital services (2.6 percent) and international holiday, travel and accommodation (2.7 percent). Offseting the rise were falls in fruit (-4.1 percent), electricity (-1.7 percent) and domestic holiday, travel and accommodation (-1.5 percent).

Australia Q2 Inflation Rate Stronger than Expected


ABS | Rida Husna | rida@tradingeconomics.com
7/31/2019 2:14:29 PM