The Australian federal government is poised to release promising inflation data this Wednesday, ahead of the Reserve Bank’s first interest rate decision of the year. Recent Treasury analysis indicates significant price reductions in key categories over the last year, including electricity (down 15.8%), fuel (6.2%), and games and hobbies (5.3%). Treasurer Jim Chalmers highlighted these trends as evidence of notable progress in combatting inflation, asserting that Australia is successfully reducing inflation while increasing wages and maintaining low unemployment.
The official quarterly inflation data from the Australian Bureau of Statistics, due soon, will heavily influence the Reserve Bank’s potential interest rate adjustments. In the September quarter, headline inflation was reported at 2.8%, the lowest since March 2021, while “trimmed mean” core inflation remained higher at 3.5%. Economists from ANZ predict a further decrease in core inflation to 3.2% for the December quarter, the slowest rate in three years.
Chalmers refrained from speculating on the Reserve Bank’s upcoming decisions, noting that while Australian inflation rates are improving, global counterparts face higher rates and rising unemployment. Current market expectations suggest an estimated 78% likelihood of a rate cut on February 18.