Australia's headline inflation rate held steady at 2.4% in April according to the ABS's monthly CPI gauge, slightly above the 2.3% expected figure. Decreasing inflation risks led the RBA to cut rates earlier this month, the second cut of its easing cycle as Governor Bullock indicated the rates board was prepared to reduce the cash rate further as required.
The monthly CPI gauge lifted by 0.8% in April, holding the annual pace steady at 2.4% for the third consecutive month. Prices in April increased by 0.7% in each of the past two years. Being the 'front' month for the more comprehensive quarterly CPI series, only a little over 60% of prices in the CPI basket were updated in April. The main movement came in electricity prices, rising by 1.5% in April as government rebates continued to unwind.
Electricity prices are still 9.6% lower than a year ago, reflecting the effect of the rebates from state and federal governments. Without those, the ABS estimates electricity prices would have risen by 1.5% over the year. In other goods categories, clothing and footwear prices ticked up from 0.7% to 0.8%yr but inflation pressures from food (3.1%yr) and fuel (-12%) eased.
Overall, goods inflation firmed from 0.9% to 1.2%yr. Services inflation also lifted slightly from 3.9% to 4.1%yr, albeit rising on limited price updates. In the quarterly CPI series, services inflation showed encouraging progress slowing to 3.7%yr in the March quarter, its weakest pace since Q2 2022.
The various measures of core inflation lifted in April but remained below the top of the 2-3% target band. CPI on a trimmed mean basis firmed from 2.7% to 2.8%yr while CPI excluding 'volatile items' was 2.9% from a prior reading of 2.7%; if holiday travel is also removed, inflation ticked up from 2.6% to 2.7%yr.
