Australia’s inflation rate has held steady after a sharp rise in egg prices was somewhat offset by falling electricity costs.
The monthly consumer price index remained at 2.4 per cent in the year ended April, the Australian Bureau of Statistics reported on Wednesday.
Economists had been expecting a 2.3 per cent rise.
It’s the third straight month that the index has held below the midpoint of the Reserve Bank of Australia’s two to three per cent target range.
But the central bank is unlikely to put too much stock in the headline figure, given it tends to bounce around from month to month.
The bank’s board places greater emphasis on less volatile quarterly inflation figures, which aren’t due until the end of July, and in particular the quarterly trimmed mean, which also removes certain items from the CPI basket.
The annual trimmed mean rose 2.8 per cent in April, up slightly from 2.7 in March.
Price rises for food and non-alcoholic beverages slowed from 3.4 per cent to 3.1 per cent in April, but would have eased further if not for bird flu, said ABS head of prices statistics Michelle Marquardt.
“While annual inflation eased for most food categories in April, egg prices were up by 18.6 per cent in the past 12 months. This comes as supply has been affected by bird flu outbreaks,” Ms Marquardt said.
Housing cost grew 0.4 percentage points faster in the 12 months to April, but new dwelling prices still rose at the slowest annual pace since April 2021 as project home builders offered discounts and promotional offers to entice business.
Electricity prices fell 6.5 per cent, compared to a 9.6 per cent fall in the 12 months to March, as customers used up energy rebates in Queensland and Western Australia.
The Reserve Bank predicts the trimmed mean to stay around the midpoint of its target range for the foreseeable future.
RBA governor Michele Bullock retired the “narrow path” analogy in her May 20 press conference following the board meeting, essentially acknowledging the battle against inflation was all but over.
Her focus turns to combating uncertainty caused by US President Donald Trump’s tariffs, with the RBA expecting the trade war to have a disinflationary impact on Australia.
The board will have to wait for the second and third monthly readings of the quarter to get data on services inflation, which will show if low unemployment is flowing through to higher labour costs for businesses.
“One area that the RBA had previously pointed to as a reason for not being confident that inflation can be sustained at current levels is the tightness of the labour market,” said Westpac chief economist Luci Ellis.
“While it still highlighted indicators that suggested remaining tightness, the forecasts for unemployment have been lifted slightly, while those for employment and wages growth have been reduced slightly.”
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