Australia’s Q1 CPI figures print flat increasing estimates of a May rate cut

Official figures show Australian CPI printed flat in Q1, causing the Australian dollar to take a tumble.

CPI figures March Source: Bloomberg

According to the Australian Bureau of statistics (ABS), the Australian CPI in March 2019 was recorded flat at 0.0%, compared with a rise of 0.5% in the December quarter 2018.

The flat number was a result of price rises in a few goods and services being fully offset by a few price falls, according to the ABS.

The CPI rose 1.3 % through the year to the March quarter 2019, after increasing 1.8% through the year to the December quarter 2018.

Reserve Bank of Australia

The soft Q1 CPI data has in turn increased expectations of a near-term rate cut by the Reserve Bank of Australia (RBA)

According to Eikon RBAWATCH, the market is pricing in a 45% chance of a May interest rate cut by the RBA.

Most significant price rises and falls

During the March quarter, vegetables rose 7.7%, secondary education 4.2% and motor vehicles rose 2.4%. It comea as, dire weather conditions and drought caused a reduction to the supply of a selection of fruits and vegetables.

Some of the other significant price falls in the March quarter were automotive fuel, falling 8.7%, while domestic holiday, travel and accommodation fell 3.8%. International holiday, travel and accommodation fell 2.1%.

Lower world oil prices at the end of 2018 saw automotive fuel prices fall 6.1% in January, before rising in February and 5.2% in March.

Australian dollar price

AUD/USD tumbled on the news, falling to $0.7050, while the ASX leaped higher up 0.9%, at time of writing.


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