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Investing.com-- Australia consumer price index inflation read higher than expected for April, remaining steady from the past month as underlying inflation also rose marginally, casting doubt over future interest rate cuts by the Reserve Bank.
CPI rose 2.4% year-on-year in April, data from the Australian Bureau of Statistics showed on Wednesday. The print was above expectations of 2.3% and remained at 2.4% for a third consecutive month.
Underlying CPI inflation- which excludes volatile items and holiday travel spending– rose 2.8% y-o-y in March from 2.6% in the prior month, picking up pace by remaining within the Reserve Bank of Australia’s 2% to 3% target range.
Wednesday’s inflation reading comes just days after the RBA cut interest rates by 25 basis points, and flagged a data-driven approach towards further easing.
But sticky CPI inflation, coupled with recent signs of persistent strength in the labor market, could give the RBA less impetus to cut interest rates in the near-term.
The RBA had also slashed its growth and inflation forecasts for the coming years, citing increased uncertainty over global trade.
April’s headline CPI reading was driven by higher spending on food, housing, and recreation. The print did reflect some improvement in Australian consumer spending, especially as spending on discretionary items increased.
Egg prices were a major inflationary item in April, as supply was disrupted by bird flu outbreaks.