The monthly Consumer Price Index (CPI) indicator rose 2.7% in the 12 months to August 2024, according to Australian Bureau of Statistics data released today (25 September).
The market barely reacted to the release of the data with the S&P/ASX200 closing lower Wednesday, dropping 15.60 points or 0.19% to 8,126.40.
The CPI result follows the Reserve Bank of Australia’s (RBA) decision yesterday to keep the cash rate unchanged at 4.35% as expected, offering some pushback to market expectations of a rate cut this year.
RBA Governor Michele Bullock was ‘less hawkish’ announcing RBA’s decision on 24 September, saying that a hike was not considered and the central bank cannot guarantee the economy will avoid recession, Saxo notes in its Global Market Quick Take: Asia.
Saxo Asia Pacific Senior Sales Trader Junvum Kim says the drop in Australia’s inflation to 2.7% – the lowest in three years – is driven by government energy interventions but also signals easing pressures.
“This development provides the RBA with greater flexibility and increases the likelihood of an earlier rate cut. AUD/USD dropped after the print, reversing from 0.69,” Kim says.
The ABS reports the most significant price rises at the ‘group’ level were housing (2.6%), food and non-alcoholic beverages (3.4%), and alcohol and tobacco (6.6%). Partly offsetting the annual increase was transport, down (1.1%).
Electricity prices plummeted 17.9% in the 12 months to August, down from a 5.1% annual drop in July – the largest annual fall for electricity on record.
The combined impact of Commonwealth Energy Bill Relief Fund (EBRF) rebates in all states and territories in addition to state rebates in Queensland, Western Australia, and Tasmania drove the annual fall in electricity prices, the ABS reports.
Meanwhile, Saxo’s Global Market Quick Take: Asia notes silver surged 4.6% to US$32.1 ($46.65) on Tuesday, its highest level since late May, as rising geopolitical tensions in the Middle East led investors to seek safe-haven assets. Yesterday the price was US$31.98.
“Gold reached new record highs, climbing 1.08% to US$2,657, as commodities benefited from China’s stimulus efforts,” Saxo reports.
WTI crude oil futures increased by 1.69% to US$71.56, and Brent Crude futures rose by 1.72% to US$75.17, which Saxo says was driven by China’s extensive economic stimulus measures and tensions in the Middle East.
China’s central bank announced a stimulus package, its largest since the pandemic, including increased funding and significant rate cuts to counter concerns regarding a prolonged economic slowdown.
Write to Adam Orlando at Mining.com.au
Images: Saxo
