Australian inflation figures have presented a mixed picture, with core inflation slowing but headline inflation rising more than anticipated. Data from the Australian Bureau of Statistics reveals that core inflation, a closely watched measure by the Reserve Bank of Australia (RBA), eased to 0.9 per cent, down from 1 per cent in the previous quarter. However, annual inflation registered at 3.4 per cent, a slight increase from the 3.3 per cent recorded previously.
Headline inflation saw a quarterly rise of 0.6 per cent, a significant drop from the 1.3 per cent increase in the prior quarter. Year-on-year, headline inflation climbed to 3.8 per cent, surpassing the previous 3.2 per cent. These figures have exceeded market expectations, which had predicted core inflation to decelerate to 0.9 per cent year-on-year at 3.3 per cent, and headline inflation to register at 0.6 per cent and 3.6 per cent year-on-year.
The RBA, led by Governor Michele Bullock, aims to bring inflation back to the 2.5 per cent midpoint of its target range. The central bank has indicated a willingness to raise the cash rate if inflationary pressures persist. A robust December jobs report had already fuelled speculation of a potential rate hike at the upcoming policy meeting.
Looking ahead, the US Federal Reserve is scheduled to announce its latest rate decision, while the RBA will convene its first policy meeting of the year on February 3. Financial markets are currently pricing in a 61 per cent probability that the RBA will increase the cash rate to 3.85 per cent at its next meeting.
