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  • Writer's pictureCrest Economics

Rising Inflation- June 2024

The RBA falls further into a dilemma as Australia’s most recent inflation print reveals it has risen 3.6% in the 12 months to April.

Rising slightly comparative to the year-on-year March figure of 3.5%, inflation has come in above expectations by 0.2%. The most significant contributors are owed to housing (4.9%), food and non-alcoholic beverages (3.8%) and alcohol and tobacco (6.5%). As such, this complicates the RBA’s mission of returning inflation within its target range of 2-3%, whereupon the chances of a rate cut in 2024 continues to grow narrower. That said, Saxo’s head of foreign exchange strategy Charu Chanana notes that although this provides reason for rate cuts to be postponed, it is unlikely that rate hikes will be implemented amidst a stretch consumer and loosening labour market (i.e. unemployment rate has recently risen to 4.1%). Nonetheless, the RBA must remain wary, as a rate easing cycle that is too delayed will threaten Australia’s slowing economic growth.

Nonetheless, Treasurer Jim Chalmers notes that “the monthly inflation indicator can be volatile and is less reliable than the quarterly measure”. Holistically, the quarterly measure continues to display inflation trending back towards its target range.

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