Annual inflation remains steady, ABS figures show; MP’s respond to news PM was forced to evacuate The Lodge over security threat
Mortgage holders may have been spared a rate hike at the next Federal Reserve meeting, but new inflation figures have put more pressure on the board for future increases.
Core inflation rose to 3.4 percent in January from 3.3 percent in December.
Reduced average inflation, the Reserve Bank’s preferred measure of consumer prices, rose 0.3 per cent in January, according to figures released by the Australian Bureau of Statistics on Wednesday.
Headline inflation, which includes a broader range of goods and services, remained steady at 3.8 percent through January, the same as December’s reading.
Finance Minister Jim Chalmers said stubborn inflation levels were likely to continue for some time.
“These are the kind of numbers we would expect to see in the first half of the year as the government’s energy rebates are lifted,” he told reporters in Brisbane. “We knew before these numbers that inflation would be higher than we wanted.”
The end of federal and state energy rebates further exacerbated inflation increases; energy costs rose 32.2 percent in January, compared to 21.5 percent in the 12-month period in December. Excluding the impact of rebates, energy prices were expected to increase by 4.5 percent since January.
After the Reserve Bank opted to raise interest rates to 3.85 per cent at its February meeting, Bendigo Bank chief economist David Robertson said a second straight rise was unlikely. But there was more increase on the cards.
“There are a number of factors that suggest this new tightening cycle is likely to be persistent and long-lasting, including the resilience of global trade in the face of tariffs and tight domestic labor and housing markets,” he said. “But we are currently only anticipating one more increase this calendar year.”
MLC senior economist Bob Cunneen said inflation data would be of interest to the central bank.
“Given these persistent price pressures, the Federal Reserve’s finger remains on the interest rate trigger,” he said. “Another interest rate hike is on the horizon for Australia.”
Dr Chalmers said the decision to end energy rebates was a difficult one.
“We know the impact on families and this data,” he said. “These new figures are another important reminder that the upcoming budget will have the right focus on inflation and productivity amid global uncertainty.”
Shadow treasurer Tim Wilson said the removal of energy subsidies revealed the true picture of inflation.
“Household food prices will continue to rise until the government stops pouring debt fuel on the inflation fire,” he said. “The cost of the supermarket basket will increase.”
AAP
