Investing.com-- Australian consumer price index inflation grew less than expected in February, with underlying inflation also cooling from the prior month and fueling bets on more interest rate cuts by the Reserve Bank.
Headline CPI inflation rose 2.4% year-on-year in Feb, compared to expectations that it would remain steady at 2.5%, data from the Australian Bureau of Statistics showed on Wednesday.
Underlying inflation- which excludes volatile items such as fuel, fresh food, and holiday travel- rose 2.7% in Feb, ABS data showed, down slightly from the 2.8% seen in the prior month. The print also remained within the RBA’s 2% to 3% annual target.
Wednesday’s CPI print comes just a week after data showed some cooling in the otherwise tight Australian labor market. Both prints factored into expectations of more easing by the RBA.
The RBA had cut interest rates by 25 basis points in February, and had signaled a largely data-driven approach to further easing. Recent inflation and labor data suggest that the central bank may now have enough headroom to cut interest rates further when it meets next week.
The Australian dollar’s AUD/USD pair fell 0.1% after the CPI data.