MNI BRIEF: Aussie CPI Eases to 7.4% In Jan
The Reserve Bank of Australia has been delivered evidence that inflation may have peaked after the monthly Consumer Price Index fell to 7.4% y/y in January, according to the Australian Bureau of Statistics.
The decline from 8.4% y/y in December aligns with the RBA's view that inflation peaked in Q4 2022, though the lessened pace of price pressures is unlikely to deter the central bank from hiking rates by 25bp to 3.60% when it meets on March 7. CPI excluding volatile items rose 7.2% in January, down from 8.1% in December. The RBA expects CPI to fall to 4.75% by the end of the year.
The most significant contributors to the annual increase in the January CPI were housing, food and non-alcoholic beverages, and recreation and culture. The ABS noted rents were growing more strongly than they were 12 months ago, while increases in new dwelling prices were moderating compared to a year ago.
RBA Governor Philip Lowe flagged the prospect of a 10th consecutive rate hike, telling a parliamentary committee in mid-February that rates hadn't peaked yet. (See MNI BRIEF: RBA's Lowe Says Rates Not At Peak Yet). Overnight indexed swaps have largely priced in another 25bp hike at the March 7 meeting. (See MNI RBA WATCH: Hawkish Shift Puts 25bps On Table In March)