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Investing.com-- Australian consumer price index inflation unexpectedly remained steady in January from the prior month, although underlying inflation advanced and was close to breaking back above the Reserve Bank of Australia’s target range.
Headline CPI inflation rose 2.5% year-on-year in January, data from the Australian Bureau of Statistics showed on Wednesday. The print was slightly below expectations of 2.6% and remained steady from the prior month.
But underlying inflation- as represented by annual mean trimmed CPI- rose 2.8% y-o-y in January, picking up from the 2.7% seen in the prior month.
CPI excluding volatile items rose 2.9% in January, up from 2.7% in the prior month.
Sticky housing and food prices were the biggest drivers of January’s inflation print, while the disinflationary effects of electricity rebates now appeared to be petering out.
Underlying inflation was now close to breaking back above the RBA’s 2% to 3% target range.
The central bank cut interest rates by 25 basis points earlier this month, but warned that inflation was likely to remain sticky, while Australian growth was expected to cool. The bank gave scant cues on when it will cut interest rates, with January’s inflation print expected to give the RBA little impetus to trim rates further.
While inflation did ease substantially through 2024, it was seen turning sticky towards the end of the year, amid persistent strength in consumer spending and the labor market.
But Australia’s economy was also seen cooling through 2024, and is expected to see a limited recovery in 2025.