Inflation pace boosts expectations of a Melbourne Cup Day rate hike
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More news: Hotter than expected inflation data has major bank economists punting on a rate hike at the Reserve Bank's Melbourne Cup Day meeting in November. Economists from CommSec and ANZ predict a 25 basis point hike when the RBA board meets on 7 November, while NAB economists also tipped a rate hike next month and warned of further increases ahead given the stickiness of inflation so far. Westpac economists still predict the RBA will hold the cash rate at 4.10%
Meanwhile, the Aussie dollar jumped 0.65% from 63.6 US cents to 64 US cents shortly after the CPI data drop, before easing to 63.8 US cents by roughly 3:30pm AEDT.
CPI rises 1.2% in September quarter, higher than expected
The news: Australian quarterly CPI came in hotter than expected at 1.2%, but annual inflation continues to fall, according to ABS figures. Monthly CPI rose for the second month in a row, driven by higher fuel prices.
The numbers: Inflation in the year to September came in at 5.4%, down from the 6.0% increase in the year to June, after peaking in the December quarter last year at 7.8%. The monthly CPI figure rose 5.6% year on year and was up from 5.2% in August and 4.9% in July.
The context: At a speech in Sydney last, night RBA governor Michele Bullock said inflation could be brought back within target within a reasonable timeframe, but the board would not hesitate to lift interest rates further if the inflation outlook worsened. The quarterly CPI was higher than analyst expectations of a 1.1% rise and will increase speculation that the RBA may raise interest rates again this year.
What they said: "While many industries price increases are slowing, automotive fuel has had large annual increases in the last two months, which has been driving the movement higher," ABS price statistics head Michelle Marquardt said in a statement.
The source: ABS Media Release
