Australia’s August CPI Rises to 4.0% YoY, but Softer Trimmed Mean Cools RBA Hike Bets, Weighing on AUD
| Pair | Now | Since publish |
|---|---|---|
| AUDUSD | — | — |
- Australia CPI 4.0% YoY Aug, core softer 3.6% YoY.
- AUD dips on soft core, but RBA seen hawkish.
- RBA still expected to tighten policy in new year.
Australia’s Consumer Price Index (CPI) increased by 4.0% year-over-year in August, matching market expectations and rising from 3.5% in July. The monthly CPI also rose by 0.4%, aligning with forecasts. However, the monthly Trimmed Mean CPI, a core inflation measure, advanced by 0.2%, falling short of the 0.3% expectation. This softer core inflation figure was perceived by markets as easing pressure on the Reserve Bank of Australia (RBA) for an immediate rate hike, causing the Australian dollar (AUD) to decline. Despite the headline and annual trimmed mean CPI remaining above the RBA’s 2% to 3% target band, market pricing for a November rate increase has reportedly fallen to around 25%. Surging fuel prices were noted as a contributing factor to the headline inflation.
Australia’s August Consumer Price Index (CPI) of 4.0% year-over-year accelerated from 3.5% in July, though it was slightly below economists’ forecast of 4.1%. Housing was the largest contributor to the annual increase, rising 5.7%, with transport costs also contributing. Monthly headline inflation registered 0.4%, while the trimmed mean was 0.2% month-over-month and 3.6% year-over-year. Rabobank noted that despite the slightly softer CPI figures, the Reserve Bank of Australia (RBA) is still perceived as hawkish and is anticipated to implement further tightening in the new year.