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Investing.com-- Australia’s producer prices rose below forecasts in the June quarter, with annual price growth easing to its slowest pace in nearly four years, reflecting weaker fuel prices and seasonal softness in services.
The Producer Price Index (PPI) for final demand rose 0.7% q-o-q in the second quarter, against expectations that it would remain steady at 0.9%, data from the Australian Bureau of Statistics (ABS) showed on Friday.
This brought the annual growth to 3.4%, which was the lowest annual increase since the September quarter of 2021.
The main driver was a rise in residential rents, as property operators passed on higher housing demand. However, growth in the sector has slowed compared to the post-pandemic surge.
Rising labour costs also contributed, as annual wage increases tied to enterprise agreements and skilled labour shortages pushed up prices in sectors like construction.
Offsetting some of the gains were a fall in petroleum refining prices, driven by crude oil prices hitting a four-year low. Winter seasonality also weighed on service sector demand.
The softer inflation print may support the Reserve Bank’s move to cut rates again in the near term.