CANBERRA - Australia's inflation rates have shown signs of cooling, as recent data reveals a slowdown in price increases, hitting a two-year low. The Consumer Price Index (CPI) for November decelerated to 4.3% year-on-year, offering some relief from the persistent inflationary pressures that have affected the economy. Core inflation, which is often a better gauge of long-term inflation trends because it strips out volatile items, was measured by the trimmed mean and also indicated a slowdown at 4.6%.
Despite the overall easing of inflation, certain sectors continue to see rising costs. Notably, rent and service charges, including electricity, have been on the uptick, with rents climbing over seven percent annually. These persistent cost increases in specific areas are a reminder that inflationary pressures remain uneven across the economy.
The Reserve Bank of Australia (RBA), under the leadership of Governor Michele Bullock, has previously enacted significant interest rate hikes in an effort to rein in inflation. However, with the latest data indicating a possible shift in the inflationary environment, analysts are now contemplating the potential for the RBA to pivot towards interest rate reductions. Should the trend towards lower inflation continue, rate cuts could be on the table, potentially starting in mid-2024.
The Australian Bureau of Statistics (ABS) is poised to release additional data on January 31st, which will cast more light on the inflation situation, particularly regarding market services price inflation. This forthcoming data is expected to play a critical role in shaping the RBA's upcoming rate decisions, as the central bank weighs the implications of the evolving economic landscape.
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