Australia Consumer Prices Rose Less Than Forecast

Australia April 24 – Australia recorded its slowest core consumer price growth in 14 years, sending the nation’s currency lower as traders boosted bets the Reserve Bank will reduce interest rates to a record low next month.

The central bank’s preferred measure of inflation eased to 0.3 percent from the previous quarter, the Bureau of Statistics said in Sydney today, the lowest reading since the third quarter of 1998. Economists predicted a 0.5 percent gain. The consumer price index advanced 0.4 percent from the prior three months, almost half the median forecast for a 0.7 percent increase.
Slower resource investment, rising unemployment and prices restrained by the currency’s longest stretch above parity in 30 years gives Reserve Bank of Australia Governor Glenn Stevens scope to cut the benchmark rate from 3 percent. Treasurer Wayne Swan said the high Australian dollar is curbing revenue and the government’s fiscal stance gives the RBA room to move.

“The exchange rate is dampening down imported inflation,” said Joshua Williamson, a senior economist at Citigroup Inc. in Sydney. “There’s now a chance of an interest rate cut before mid-year.”

Tradables, such as imported electrical goods and clothing, fell 1.2 percent in the quarter. Non-tradables, or domestic inflation for goods and services that aren’t imported such as fast food and utilities, rose 1.3 percent from the previous three months, the report showed.

More:Bloomberg