Australia: Inflation remains steady and within target in April
Latest reading: Inflation was stable at 2.4% for the third consecutive month in April, slightly above market estimates but remaining around the midpoint of the 2.0–3.0% target band of the Reserve Bank of Australia (RBA). Looking at the details of the release, transportation costs fell at a quicker pace in April and price pressures for food eased, broadly offsetting a faster rise in housing costs.
Still, the trend pointed down, with annual average inflation inching down to an over three-year low of 2.7% in April from 2.8% in March. Meanwhile, the annual rise in the trimmed mean—a closely watched measure of core inflation by the RBA—edged up to 2.8% in April (March: 2.7%), but remained within the Central Bank’s target band for the fifth consecutive month.
Lastly, consumer prices increased 0.24% in April over the same month of last year, coming in below March’s 0.40% increase.
Outlook: Our panel sees inflation easing from April’s level this quarter, nearing the lower bound of the RBA’s target band on lower oil prices, a looser labor market and high interest rates. Price pressures should then trend up through December as domestic demand picks up and the base effect turns less favorable. Still, inflation should remain within target this year as a whole, averaging a five-year low while remaining slightly above the pre-Covid decade average.