Latest news with #CherelleMurphy
Sky News AU
4 days ago
- Business
- Sky News AU
Consecutive interest rate cuts in doubt after new ABS data showed inflation steady at 2.4 per cent in year to April
Aussies hoping for back-to-back rate cuts may have their hopes dashed as fresh data showed inflation came in hotter than expected. New Australian Bureau of Statistics data showed headline inflation held steady at 2.4 per cent in the year to April while trimmed mean inflation – the middle 70 per cent of price changes that is central to the RBA's call – rose 0.1 per cent to 2.8 per cent. Inflation came in slightly above the market consensus of 2.3 per cent and money markets were pricing in a 60 per cent chance of a cut when the RBA next meets in July after the data was released. This is a fall from the 78 per cent chance factored in on Tuesday. EY's chief economist Cherelle Murphy said the RBA is likely to deliver two more rate cuts during this easing cycle as risks of inflation rising have eased, while economic uncertainty from the US-instigated trade war continues. 'The extent of the cuts will depend on how trade policy and geopolitical frictions impact the global economy and business investment and consumer decisions,' Ms Murphy said. 'We expect at least another two 25bp cuts this year, with possibly more over 2026.' Market analyst at eToro Josh Gilbert said the RBA remains cautious about inflation after delivering a cut last week. 'The RBA will be on watch and ... a rate cut in July is certainly not nailed on,' Mr Gilbert said. 'Last week's rate cut, in which the cash rate decreased to 3.85 per cent, doesn't necessarily set the stage for back-to-back cuts.' The uncertainty from Trump's trade war continues to weigh heavily on the future of the central bank's cash rate calls and the nation's economy. State Street Markets' head of APAC macro strategy Dwyfor Evans said the US trade war, along with Australia's unemployment rate that sits near historic lows, means the RBA will be particularly cautious with future calls. 'Given the continued uncertainty around tariffs, a strong jobs market and the base effects pressures in Q3, expect the RBA to maintain its cautious stance on prospective easing,' Mr Evans said. The cash rate now sits at 3.85 per cent after it was lowered last week for the second time this year. It was held at 4.35 per cent for almost a year and a half as the RBA stamped out post-pandemic inflation. The ABS' latest data showed food and non-alcoholic beverages inflation fell to 3.1 per cent from 3.4 per cent in March in a sign most groceries were dropping in price, according to the ABS' head of prices statistics Michelle Marquardt. 'While annual inflation eased for most food categories in April, egg prices were up by 18.6 per cent in the past 12 months," Ms Marquardt said. "This comes as supply has been affected by bird flu outbreaks.' Housing (up 2.2 per cent) was another large factor in the recent inflation data with rents rising five per cent over the year to April. This marked the lowest annual growth in rents since February 2023 as vacancy rates rise across most capital cities. Electricity prices fell 6.5 per cent in the year to April, compared to a 9.6 per cent fall in the 12 months to March. Power rebates played a significant role for the fall in electricity prices despite the impact of various state and federal concessions phasing out. 'Without all the Commonwealth and state government rebates, electricity prices would have risen 1.5 per cent in the 12 months to April,' Ms Marquardt said.
CNBC
4 days ago
- Business
- CNBC
Australia's consumer inflation holds steady in April, rate cuts still in view
Australian consumer inflation held steady in April as higher health and holiday costs offset a drop in petrol prices, although the monthly measure tends to be volatile and left hopes for more interest rates cuts mostly intact. Data from the Australian Bureau of Statistics on Wednesday showed the monthly consumer price index rose 2.4% in April compared with a year earlier, unchanged from March but above median forecasts of 2.3%. The trimmed mean measure of core inflation increased by an annual rate of 2.8% in April from 2.7% in March. A measure excluding volatile items and holiday travel also picked up to 2.8% from 2.6%. Still, those figures remained in the central bank's target band of 2-3%. Market reaction has been a tad muted as the April report only covers a portion of the full CPI basket and is concentrated on goods rather than services. Goods prices rose a mere 0.9% from a year ago. The Australian dollar was little changed at $0.6440, while three-year bond futures were flat at 96.60. "Today's monthly CPI reading is not a comprehensive measure of price growth in the economy, with price changes for durable goods such as clothing and household goods measured, while many services prices are held constant," said EY chief economist Cherelle Murphy. "The Reserve Bank is likely to deliver further monetary easing, given the upside risks to inflation have largely disappeared while global policy uncertainty remains elevated." Swaps continued to price in a 65% probability for a rate cut at the next meeting in July, while a move in August is more than fully priced in following the release of the second quarter CPI report at the end of July. The Reserve Bank of Australia cut interest rates to a two-year low last week as cooling inflation at home offered scope to counter rising global trade risks, and left the door open to further easing in the months ahead. At the same time, the labour market has remained surprisingly resilient, churning out a solid amount of new jobs every month, keeping the jobless rate low at 4.1%. Still tepid wage growth suggests few risks of a damaging wage-price spiral. Wednesday's report showed health costs rose 4.4% from a year ago, driven by a jump in health insurance premiums that are usually adjusted in April. Holiday travel and accommodation also jumped 5.3% from a year ago due to stronger demand during the Easter and school holiday period. Prices for fuel tumbled 12% from a year ago. Rental prices rose 5.0%, the slowest annual growth since February 2023 in a sign for more inflation relief ahead, while electricity fell 6.5% thanks to government rebates on power bills.
Yahoo
4 days ago
- Business
- Yahoo
Australia's consumer inflation holds steady in April, rate cuts still in view
SYDNEY (Reuters) -Australian consumer inflation held steady in April as higher health and holiday costs offset a drop in petrol prices, although the monthly measure tends to be volatile and left hopes for more interest rates cuts mostly intact. Data from the Australian Bureau of Statistics on Wednesday showed the monthly consumer price index (CPI) rose 2.4% in April compared with a year earlier, unchanged from March but slightly above median forecasts of 2.3%. The trimmed mean measure of core inflation increased by an annual rate of 2.8% in April from 2.7% in March. A measure excluding volatile items and holiday travel also picked up to 2.8% from 2.6%. Still, those figures remained in the central bank's target band of 2-3%. Market reaction has been a tad muted as the April report only covers a portion of the full CPI basket and is concentrated on goods rather than services. Goods prices rose a mere 0.9% from a year ago. The Australian dollar was little changed at $0.6440, while three-year bond futures were flat at 96.60. "Today's monthly CPI reading is not a comprehensive measure of price growth in the economy, with price changes for durable goods such as clothing and household goods measured, while many services prices are held constant," said EY chief economist Cherelle Murphy. "The Reserve Bank is likely to deliver further monetary easing, given the upside risks to inflation have largely disappeared while global policy uncertainty remains elevated." Swaps continued to price in a 65% probability for a rate cut at the next meeting in July, while a move in August is more than fully priced in following the release of the second quarter CPI report at the end of July. The Reserve Bank of Australia cut interest rates to a two-year low last week as cooling inflation at home offered scope to counter rising global trade risks, and left the door open to further easing in the months ahead. At the same time, the labour market has remained surprisingly resilient, churning out a solid amount of new jobs every month, keeping the jobless rate low at 4.1%. Still tepid wage growth suggests few risks of a damaging wage-price spiral. Wednesday's report showed health costs rose 4.4% from a year ago, driven by a jump in health insurance premiums that are usually adjusted in April. Holiday travel and accommodation also jumped 5.3% from a year ago due to stronger demand during the Easter and school holiday period. Prices for fuel tumbled 12% from a year ago. Rental prices rose 5.0%, the slowest annual growth since February 2023 in a sign for more inflation relief ahead, while electricity fell 6.5% thanks to government rebates on power bills. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
