MNI DATA IMPACT: Australia Q1 Inflation Outpaces Expectations

     SYDNEY (MNI) - Australia's headline CPI increased by 0.3% in the March

quarter, outpacing market expectations of a 0.2% rise, with an annualised

inflation rate of 2.2% against 1.8% for the quarter to end-December 2019. 

     These are the key points of note:

Inflation is now within the RBA target range of between 2% and 3%, but this is

expected to be short-lived due to the COVID-19 disruptions.

Calm before the storm 

The Q1 data will not include the full impact of the economic disruption from the

coronavirus pandemic. The RBA has already forecast that inflation could move

into negative territory in Q2 before rebounding later this year. Australian

inflation was last in negative territory in the 1960s.

Fuel prices drag 

Australian fuel prices fell 6.0% in Q1, dragging the headline figure lower by

0.2pps. Other falls were recorded for domestic holiday travel and accommodation,

down 3.1%, and international travel, down 3.0%

Vegetables spike higher 

The biggest price rise in the March quarter was for vegetables, up 9.1%. Prices

for pharmaceutical products rose 5.1% while secondary education was up by 3.4%.

--MNI Sydney Bureau; +61 405322399; email: lachlan.colquhoun.ext@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

[TOPICS: M$A$$$]