Australia’s inflation rallies in the second quarter

As the Australian Bureau of Statistics informed, in the second quarter, the consumer price index managed to rally by up to 0.4% exactly as in the first quarter, thus demonstrating an annualized surge of 2.1%. By the way, financial analysts had hoped for a quarterly soar in CPI by about 0.5% as well as in annual terms by nearly 2.2%.

In 2018 to March, the consumer price index edged up by about 1.9%. The price pressure speeded up a bit. However, the price leap was mainly observed in relatively a small number of categories of products, greatly impacted by public policy.

As market experts explained, most of this annual surge took place because of higher prices for electricity, tobacco and fuel. As for the annual soar in prices for footwear and clothing, household appliances and furniture, they were intact.

In this quarter the highest price surge was observed for motor fuel, which rallied by nearly 6.9%, tobacco that gained 2.8% and medical services that ascended by up to 3.1%.

However, the slump in prices was observed for residence and travel in Australia (2.7%), for vegetables (2.9%) and car purchases (2%).

In the second quarter, the index of core inflation managed to ascend by 0.5% exactly as in the first quarter, following seasonal adjustments. Surge in annual terms accounted for 1.9%, and it generally coincided with the previous outcome.

Considering that core inflation still appears to be far from the major bank’s objective of 2% -3%, the key financial institution’s interest rate is going to stay intact at 1.5% in the nearer future.

Reflecting a poor inflation report, Australia’s currency headed south, while futures for government bonds managed to ascend, hinting at a sooner slump in the probability of a soar in the RBA rate.

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