Australian Inflation Misses Estimate, Traders Slash RBA Bets

Skip to Content News Archives Economy Energy Oil & Gas Renewables Electric Vehicles Mining Commodities Agriculture Real Estate Mortgages Mortgage Rates Finance Banking Insurance Fintech Cryptocurrency Work Wealth Smart Money Wealth Management Investor Personal Finance Family Finance Retirement Taxes High Net Worth FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials More Innovation Information Technology FP500 Podcasts Small Business Lives Told Tails Told Shopping Financial Post Store Obituaries Place a Notice Advertising Advertising With Us Advertising Solutions Postmedia Ad Manager Sponsorship Requests Classifieds Place a Classifieds ad Working Profile Settings My Subscriptions Saved Articles My Offers Newsletters Customer Service FAQ News Economy Energy Mining Real Estate Finance Work Wealth Investor FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials This advertisement has not loaded yet, but your article continues below.HomePMN BusinessAustralian Inflation Misses Estimate, Traders Slash RBA BetsAustralia’s core inflation came in cooler than anticipated last quarter, prompting money markets to slash bets on another interest-rate increase this year.Author of the article: You can save this article by registering for free here. Or sign-in if you have an account.os{j)}wy]1s(tk)o73eq}a)5_media_dl_1.png Australian Bureau of Statistics,(Bloomberg) — Australia’s core inflation came in cooler than anticipated last quarter, prompting money markets to slash bets on another interest-rate increase this year.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountThe annual trimmed mean gauge of consumer prices, which shaves off volatile items, rose 3.6% versus economists’ estimate of 3.7%, data from the Australian Bureau of Statistics showed Wednesday. The RBA aims for the midpoint of its 2-3% band, a level it hasn’t reached in more than four years.On a quarterly basis, the underlying measure rose 0.8% from three months earlier, compared with a 0.9% forecast.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againTraders sharply wound back wagers on another rate hike this year to about 50%, from more than 90% before the report. The currency dipped and the policy-sensitive three-year government bond yield declined 9 basis points to 4.48%.The print was “softer than we expected and it was pretty nice to see some hot services categories ticking down in June,” said AMP Economist My Bui. “It’s still high though, so we still think there is potential for one more hike this year.”The RBA raised rates at its first three meetings of the year to try to suppress resurgent inflation pressures that emerged even before the US-Iran war unleashed a global energy shock. The CPI suggests that while prices remain elevated, the board is unlikely to need to resume tightening on Aug. 11, when the bank will also release updated quarterly forecasts. RBA Governor Michele Bullock, responding to a question after a major setpiece speech on Tuesday, acknowledged that the longer inflation “is out of target, the more concerned that the board becomes.” She noted that in the most recent forecasts, core prices were only seen falling below 3% late next year, after already being high for an extended period.“Let’s just hope there’s no more shocks,” she said, referring to the current Middle East conflict, which came on the heels of the Ukraine war and the pandemic before that. All helped drive global price pressures.Australia’s economy has become more inflation-prone as sluggish productivity for more than a decade has lowered the potential growth rate — the level of expansion the economy can manage before it begins fueling inflation. The RBA’s job has also been complicated by the on-again, off-again nature of talks between the US and Iran to try to end their war, reopen the Strait of Hormuz, and allow oil to flow once again. Fuel prices have been on a rollercoaster ride as markets track the latest comments on the chances of a peace deal against renewed eruptions of violence.The other difficulty for the RBA has been a tight labor market that makes it difficult to cool price pressures. Australia’s employment growth surged again in June, even as the unemployment rate stayed unchanged. In early July, RBA Assistant Governor Sarah Hunter warned more supply shocks were likely in the period ahead as global instability increases — reinforcing the need to aim for low and stable inflation. This advertisement has not loaded yet.This advertisement has not loaded yet, but your article continues below.Hunter is scheduled to hold a fireside chat on Thursday morning in the last calendar event before the board meets in August. The consumer price index rose 0.6% in the second quarter from the prior three months, when it climbed 1.4%On a monthly basis, the CPI unexpectedly slid 0.1%; from a year earlier, it increased 3.8%, compared with 4% in MayThe largest contributor to annual inflation in June was housing, up 6.8%, followed by food and non-alcoholic beverages, which advanced 3.3%—With assistance from James Mayger and Garfield Reynolds.(Updates market reaction, adds comment from economist and further details from report.)Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.