Australia’s Inflation Remains Subdued, Signaling Rates on Hold

Bloomberg.com — Australia’s inflation remained subdued in the three months through June, suggesting the central bank’s interest-rate pause will extend into a third year.

The key annual core measure — trimmed-mean inflation — came in at 1.9 percent and has now undershot the central bank’s target for 2-1/2 years, a government report showed Wednesday. Tradable goods prices, which are impacted by the currency and other international factors, climbed just 0.3 percent from a year earlier, highlighting the lack of global price pressures.

The report highlights “the disinflationary pressures that have plagued the Australian economy in recent years,” said economist Callam Pickering of global jobs site Indeed, who previously worked at the central bank. “It appears unlikely that this inflation report will impact RBA thinking on monetary policy.” […]

• Quarterly CPI, or headline inflation, climbed 0.4% in the second quarter vs estimated 0.5%; annual CPI climbed 2.1% vs forecast 2.2%
• Quarterly weighted-median gauge, also a core measure, rose 0.5%, matching estimates, while the annual number also matched forecasts at 1.9%
• The biggest quarterly price rises were automotive fuel, climbing 6.9%, medical and hospital services, jumping 3.1%, and tobacco up 2.8%
• Price declines saw domestic holiday travel and accommodation down 2.7%, motor vehicles 2% lower and vegetables falling 2.9%
• Non-tradables inflation, affected by domestic variables like utilities prices, rose 3% in the second quarter from a year earlier