Consumer prices in Australia rose by 3.6% from a year ago in Q1 2024, which is slower than Q4 2023’s 4.1% increase but still faster than the 3.4% uptick that the markets had expected. It also marked the fifth consecutive quarter of lower annual inflation since the 7.8% reading in December 2022.
A closely watched trimmed mean CPI clocked in at 4.0%, lower than the previous quarter’s 4.2% increase and is still above the Reserve Bank of Australia’s (RBA) 2% – 3% target.
- Quarterly headline CPI: 1.0% (0.7% expected, 0.6% previous)
- Annual headline CPI: 3.6% (3.4% expected, 4.1% previous)
- RBA’s weighted mean CPI: 4.4% y/y (4.0% expected, 4.4% previous)
On a quarterly basis, price edged up by 1.0%, which is faster than both the previous quarter’s 0.6% increase and the 0.7% gain that analysts estimated.
Meanwhile, the RBA’s weighted mean CPI steadied at a 4.4% annual pace for the period.
A closer look also showed that goods inflation slowed for a sixth consecutive quarter while services inflation eased for a third straight quarter.
Link to Australia’s inflation report for Q1 2024
Market Reactions
Australian Dollar vs. Major Currencies: 5-min
Overlay of AUD vs. Major Currencies Chart by TradingView
Thanks in part to a risk-friendly trading environment carrying over from the previous U.S. session, the Australian dollar started Asian session trading on a bit of strength.
The upside surprises in Australia’s Q1 2024 inflation figures boosted AUD across the board, with the comdoll gaining about 0.30% – 0.50% against its major counterparts.
AUD soon gave up part of its gains, however, possibly on traders taking profits ahead of potential economic data catalysts scheduled later this week.
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