Data from the Australian Bureau of Statistics (ABS) showed that inflation in Australia maintained its 1.0% quarterly growth in Q2 2024, which was led by price increases in food, clothing, and alcohol and tobacco products.
Annually, price increases had accelerated from 3.6% to 3.8% in Q2 compared to the previous year, and marked the first increase since Q4 2022.
Other CPI measures weren’t as hawkish:
RBA’s trimmed mean CPI (q/q): 0.8% (0.9% forecast, 1.0% previous)
RBA’s trimmed mean CPI (y/y): 3.9% (4.0% forecast and previous)
RBA’s weighted median CPI (q/q): 0.8% (1.0% forecast, 1.1% previous)
RBA’s weighted median CPI (y/y): 4.1% (4.3% forecast, 4.4% previous)
Link to ABS Q2 2024 CPI Report
In a separate release, Australia’s June CPI came in at 3.8% compared to a year ago, slower than the expected 3.9% uptick and May’s 4.0% growth.
The report noted the significant price increases for housing (+5.5%), food and non-alcoholic beverages (+3.3%), alcohol and tobacco (+6.9%), and transport (+4.2%) prices.
Excluding volatile items, prices had maintained their 4.0% growth in May, while the annual trimmed mean inflation cooled from 4.4% to 4.1% in June.
Australian dollar vs. Major Currencies: 5-min
Overlay of AUD vs. Major Currencies Chart by TradingView
Whether it was risk aversion or profit-taking ahead of the CPI report, the Australian dollar had been losing pips against its counterparts ahead of the actual event.
Then, AUD dropped sharply across the board at the reports’ releases.
While headline CPI data maintained their growth or barely edged lower, the decelerations in the closely-watched RBA trimmed mean CPI were enough for the markets to speculate that the Reserve Bank of Australia (RBA) can meet its inflation targets without requiring further tightening.
The Australian dollar stayed near its Asian session lows for about 30 minutes or so before seeing more sustained buying (potentially pullback) pressure.