Data from the Australian Bureau of Statistics (ABS) showed consumer price increases slowing from 1.0% to 0.2% in the third quarter of 2024 versus market expectations for a reading of 0.3%.
On an annual basis, The CPI for the third quarter fell from 3.8% to 2.8%, above the middle of the Reserve Bank of Australia (RBA) inflation target of 2% to 3%.
The ABS cited “significant declines” in electricity and fuel costs as a driver of the slowdown in inflation. The slowdown was attributed to a 17.3% drop in electricity prices due to government subsidies, while gasoline fell by 6.2% in the quarter.
The report also noted that leisure and culture (+1.3%), food and non-alcoholic beverages (+0.6%), and alcohol and tobacco (+1.3%) saw the largest increases, while government rebates on energy bills began in July 2024. They may have helped reduce Electricity costs for families during this period.
Average inflation, which excludes declines in energy and fuel prices, also fell from 4.0% to 3.5% in the September quarter.
Services inflation, a key concern for the RBA, rose from 4.5% in the second quarter to 4.6% in the third quarter and has remained at around 4.5% over the past 12 months.
Link to the Australian Bureau of Statistics (ABS) Q3 2024 CPI report.
In a separate release, ABS shared this Inflation was 2.1% year-over-year in September, much slower than August’s increase of 2.7%.
Annual inflation also averaged 3.2%, slower than August’s increase of 3.4%.
Link to the Australian Bureau of Statistics (ABS) September report
The ABS explained that food and non-alcoholic beverages (+3.3%), alcohol and tobacco (+6.3%), and housing (+1.6%) saw the largest price increases but were partly offset by a decline in transport (-3.8%). Prices.
Australian dollar against major currencies: 5 minutes
Overlay of the Australian dollar against major currencies Charts from TradingView
The Australian dollar started the day a bit weaker after optimism over China’s potential $1.4 trillion fiscal stimulus plans cooled compared to the previous session.
Comdol traded in ranges ahead of the report and rose when the annual third-quarter CPI reading remained above the middle of the RBA’s target of 2% to 3% as the central bank had forecast. Moreover, this decline was mostly driven by lower fuel prices and temporary government energy subsidies. Last but not least, components such as services inflation remain high, supporting the need for tight monetary policies for a while yet.
The Australian dollar rose across the board as traders speculated that the report may not move things around for the Reserve Bank of Australia. The rally continued for about an hour before general risk aversion and caution ahead of major events this week pushed the Australian dollar to new intraday lows.