Investing.com-- Australian consumer price index inflation eased in the third quarter amid falling electricity and fuel prices, although underlying inflation remained sticky and above the Reserve Bank’s annual target.
CPI grew 2.8% year-on-year, data from the Australian Bureau of Statistics showed on Wednesday. The reading was higher than expectations of 2.3% but fell sharply from the 3.8% seen in the prior quarter.
CPI grew 0.2% quarter-on-quarter, slightly below expectations of 0.3% and slowing substantially from the 1% growth in the prior quarter.
The decline in headline CPI inflation was driven chiefly by softer electricity and fuel prices, amid government programs aimed at bringing down electricity costs, while falling global oil prices brought down fuel costs.
“While prices continued to rise for most goods and services, these increases were offset by large falls for Electricity and Automotive fuel prices,” the ABS said in a statement.
This trend did not translate into trimmed mean CPI- which excludes volatile items and is watched by the RBA as a reading on underlying inflation. Annual trimmed mean CPI grew 3.5% as expected in the third quarter, slowing slightly from 3.9% in the prior quarter. The reading still remained above the RBA’s 2% to 3% annual target.
Wednesday’s data comes just days before a RBA meeting next week, where the central bank is widely expected to keep interest rates steady and offer few signals on when it could begin cutting interest rates.
Sticky inflation and a robust job market have kept the RBA mostly hawkish in its outlook, although the central bank signaled at its previous meeting that more interest rate hikes were unlikely.
But Wednesday’s reading furthers the notion that the RBA will keep interest rates high for longer, amid sticky goods and services inflation.