Australian Bureau of Statistics data showed that inflation in Australia maintained its quarterly growth of 1.0% in the second quarter of 2024, which was driven by price increases in food, clothing, alcohol and tobacco products.
On an annual basis, the pace of price increases accelerated from 3.6% to 3.8% in the second quarter compared to the previous year, which represents the first increase since the fourth quarter of 2022.
Other CPI measures were not as stringent:
RBA Cut Average CPI (QoQ): 0.8% (0.9% forecast, 1.0% prior)
The Reserve Bank of Australia lowered the average consumer price index (YoY): 3.9% (4.0% forecast and previous)
RBA Weighted Average CPI (QoQ): 0.8% (1.0% forecast, 1.1% previous)
RBA Weighted Average CPI (YoY): 4.1% (4.3% forecast, 4.4% previous)
Link to the Australian Bureau of Statistics’ Q2 2024 Consumer Price Index report
In a separate statement, Australia’s consumer price index in June was 3.8% from a year earlier, slower than the expected 3.9% rise and May’s 4.0% growth.
The report noted significant increases in housing prices (+5.5%), food and non-alcoholic beverages (+3.3%), alcohol and tobacco (+6.9%), and transportation (+4.2%).
Excluding volatile goods, prices held steady at 4.0% in May, while average annual inflation slowed from 4.4% to 4.1% in June.
Link to the Australian Bureau of Statistics’ June Consumer Price Index report
Australian Dollar vs Major Currencies: 5 minutes
Comparison between the Australian Dollar and major currencies Chart by TradingView
Whether it was risk aversion or profit taking ahead of the CPI report, the Australian dollar was losing some points against its peers ahead of the actual event.
Hence, the Australian dollar fell sharply across the board when the reports were released.
While headline CPI data held steady or barely fell, the slowdown in the closely watched RBA-led CPI rate cut was enough for markets to speculate that the RBA can meet its inflation targets without the need for further tightening.
The Australian dollar remained near its Asian session lows for about 30 minutes before seeing more sustained buying pressure (potential pullback).