Australian inflation subdued in past quarter
AFPSYDNEY -- Australian inflation came in lower than expected Wednesday, climbing a seasonally adjusted 0.5 percent in the December quarter and raising speculation about an interest rate cut.
January 24, 2013, 12:02 am TWN
The Australian Bureau of Statistics said the consumer price index rose 0.5 percent after seasonal adjustments in the three months to Dec. 31 and was 2.2-percent higher on-year.
“They are softer (than predicted), they do tell us that inflationary pressure is pretty benign,” chief economist at AMP Capital Investors Shane Oliver said.
The most significant rises for the quarter were in domestic holiday travel, fuel and rents, while a fall in the price of vegetables, computer and electrical equipment and pharmaceuticals offset these.
The data places inflation inside the Reserve Bank of Australia's 2- to 3-percent target range, meaning it has room to cut interest rates in coming months, analysts said.
The central bank cut the official interest rate by 25 basis points to 3 percent in December, a level not seen since the financial crisis, in a bid to bolster the economy.
Analysts said the benign inflation did not change market expectations for a further rate cut in the near-term, possibly when the RBA board next meets on monetary policy on Feb. 5.
“We'll get a rate cut, whether it's February or March,” Bell Potter senior adviser Stuart Smith said.
The Australian dollar fell on the data, slipping from US$1.0562 to US$1.0548.