Monthly CPI indicator
Date: Wednesday, 29 May at 11.30am AEST
Several key Australian inflation measures released in late April surprised to the upside. Headline inflation in Q1 2024 rose by 3.6% YoY, down from 4.1% in the prior period but above market expectations of 3.4%. The RBA’s preferred measure of core inflation, Trimmed Mean, increased by 4% YoY, above market expectations of 3.8%
Separately, the Monthly CPI indicator for March rose 3.5% YoY, above market expectations of a 3.2% YoY rise. Furthermore, the three-month rolling average annualised growth rate in the seasonally adjusted core measure increased to 3.6% YoY from 2.8%
The higher-than-expected inflation readings were noted in the minutes from the RBA’s May Board meeting: “Inflation had eased further in the March quarter in year-ended terms, but the pace of disinflation had slowed, and the recent inflation data were stronger than had been expected in February”
While the RBA Board discussed raising rates at the May meeting, it elected to keep rates on hold as “staff forecasts presented a credible path back to the inflation target, with the risks surrounding the forecasts judged to be balanced”
As April is the first month of the new quarter, this Monthly CPI indicator will only provide updates on about 60% of the basket. Additionally, it will be skewed towards goods rather than the troublesome service components such as dining out, medical services, and transportation. The preliminary expectation is for the Monthly Indicator in April to ease to 3.3% YoY from 3.5%.