Australia inflation holds at two-year low for three straight months

Australia inflation rate 2024 news: Australian consumer price inflation held at a two-year low in February, contrary to expectations for a slight uptick, in a result reinforcing market wagers that the next move in interest rates would be down. The Australian dollar eased 10 ticks to $0.6525 and three-year bond futures bounced from earlier lows to be steady at 96.40, while markets continued to bet that any rate relief would likely start in August or September.

Data from the Australian Bureau of Statistics on Wednesday showed its monthly consumer price index (CPI) rose at an annual pace of 3.4 per cent in February, unchanged from January and under forecasts of 3.5 per cent.

For the month, CPI rose 0.2 per cent. The three-month annualised pace is 2.4 per cent, within the central bank's target band of 2 per cent to 3 per cent. However, a closely watched measure of core inflation, the trimmed mean, rose an annual 3.9 per cent, up slightly from 3.8 per cent in January. Policymakers had forecast the gauge to fall to 3.6 per cent by June.

Holiday travel and accommodation prices fell by a sharp 9.3 per cent in February from a month earlier due to lower demand following the end of the school holiday period. Slowing inflation is one reason that the Reserve Bank of Australia (RBA) kept interest rates unchanged at 4.35 per cent for a third straight meeting this month and softened its stance by dropping a tightening bias.

RBA Governor Michele Bullock has not ruled anything in or out on policy, saying risks are "finely balanced". Markets had long wagered the tightening campaign is over but only a modest amount of 40 basis points in easing is expected this year.

Weakness in the labour market in December and January appeared overstated as data showed the economy added a staggering 116,500 jobs in February and the jobless rate ticked down to 3.7 per cent from a two-year high of 4.1 per cent. The February CPI report, which provided an update on more services in the first quarter of the year, showed rent inflation accelerated to 7.6 per cent in February from 7.4 per cent the previous month while insurance prices rose 8.4 per cent from a year ago, speeding up from 8.2 per cent in January.