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Australia’s Q4 wage price index rises 0.5%, missing expectations

A weaker than expected wage price index has seen the Aussie dollar fall slightly, missing analysts' expectations.

The WPI has risen 0.5% coming in weaker than expected, validating the RBA’s recent tone on a possible rate cut.

The estimated print was 0.6%, leaving the annualised figure at 2.3%, as expected.

What does a weaker WPI mean?

A weaker than expected WPI validates growing concerns over the reserve bank of Australia’s next rate cut. Investors will be factoring in a rate cut with the weaker than expected WPI figures, putting added pressure on AUD/USD.

It comes after the Australian central bank put rate cuts back on the table in their minute meeting earlier in the week, putting markets in volatility.

IG market analyst, Kyle Rodda says, ultimately the RBA's next move is on focus.

‘The prospect of a more hawkish RBA hinges on the tightening labour market’s ability to deliver a pay-rise to Australian workers. Fundamentally: it’s this key ingredient touted as the offset to the consumption-sapping impacts of mounting private debt levels, weak retail demand, and the oft-cited “reverse-wealth-effect” brought about falling property prices the country’s major capitals.’ Mr. Rodda said.

Australian dollar price

The Aussie reported marginal losses against the greenback, at $0.7160, hitting a session low of $0.7152 after the release.

Australian shares lower

Australian shares were also affected on Wednesday, falling off the back of weakness in the consumer and property sectors. The S&P/ASX 200 index fell up to 0.3 % , after the index closed 0.3% higher on Tuesday.

It comes as Australia's biggest supermarket chain Woolworths Group fell 6.5% to its lowest in about two months after it warned of a prolonged slump in consumer sentiment. Woolworths also posted a lower-than-expected first-half profit.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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