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MNI DATA IMPACT: Australia Inflation Up, But Outside RBA Range

MNI (London)
By Lachlan Colquhoun
     SYDNEY (MNI) - Australia's headline inflation increased by 0.6% in the
second quarter and delivered an annualised figure of 1.6%, up from 1.3% in Q1.
This was slightly higher than the 1.5% anticipated by the market.
     Following are other points of interest in the release from Australian
Bureau of Statistics:
     Outside of the RBA target range
At 1.6% inflation is outside the Reserve Bank of Australia's target range of 2%
to 3% and seems destined to stay there for some time to come.
RBA rate decision next week
Today's release is the last piece of significant economic data before the RBA
Board meets to discuss policy options. After two consecutive cuts in recent
months lowered rates to a record low 1%, the RBA is widely expected to pause
next week. The Bank will welcome today's inflation result as moving in the right
direction, but it is unlikely to change its dovish stance in the short or medium
term, or the likelihood of another rate cut this year.
Fuel prices surprise 
After peaking in October 2018, fuel prices have subsided and weighed on last
quarter's CPI result, down 8.7% for the quarter. Prices at the pump have not
surged since then, but today's CPI result included a 10.2% increase in the price
of automotive fuels.
Drought impact
The ongoing drought in regional Australia has supported headline inflation, with
the price of vegetables up 7.7% last quarter. There are signs that this may be
abating, with the price of fruit down 4.1% in Q2.
--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com
[TOPICS: MALDS$,M$A$$$,M$L$$$]
MNI London Bureau | +44 203-865-3812 | les.commons@marketnews.com
MNI London Bureau | +44 203-865-3812 | les.commons@marketnews.com

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