Australia’s inflation tops one-year high in August, rate cut bets soften

Written by Stella Ciou

Sydney (Reuters) -The prices of Australian consumers increased at the fastest annual pace in one year in August after the month of July, indicating some of the upward trend to inflation that prompted the markets to restore the chances of lowering the imminent policy.

The Australian dollar rose 0.3 % to $ 0.6619, while government futures decreased for three years 7 to 96.45, the lowest level in three weeks.

Investors have doubled on the bets that the Australian Reserve Bank will exceed a step in interest rates next week, given that the last flow of data was on the strong side. The horizons of the movement in its meeting in November faded to 50 % of about 70 % before the data.

On Wednesday from the Australian Bureau of Statistics, the data showed that the monthly consumer price index (CPI) increased by 3.0 % in August of the previous year and higher than 2.8 % in July, mostly due to basic effects. It came at a slightly upper expectation of 2.9 %.

The main medium scale of basic inflation was 2.6 % annually in August, a decrease from 2.7 % in July. However, a scale with the exception of flying elements and holidays increased to 3.4 % of 3.2 %.

The details of the report, most of them in the services sector, have suggested some of the ups of the third quarter, which led to Barrenjoey, Deutsche Bank, National Australia Bank, Macquarie and Citi Australia to abandon their invitations to reduce the rate in November.

“This physical surprise is the bullish surprise and the details,” said analysts at Barrenjoey in a note for customers, noting that “this bullish surprise is the bullish surprise and the details,” Point analysts at Barrenjoey said in a note for customers.

“It is a stormy and certain path here and all the turns need to tend in the same direction so that RBA can provide this additional price reduction.”

NAB now believes that interest rates are suspended by 3.6 % until May of next year, compared to other discounts expected in November and February, while the Australian Commonwealth Bank said that the November discount is not an expired deal.

RBA has reduced the importance of the monthly consumer price index, saying that the series remained very volatile, as it reduced interest rates this year only in February and August after evaluating the quarterly inflation numbers.

On Monday, Governor Michel Bullock said that the Australian economy was in a good place, as inflation is expected to return to the middle of the target range from 2 % to 3 %, and the labor market approaching full employment.

The Central Bank expects the main inflation, which has lasted 2.1 % in the last quarter, to capture up to 3.1 % by mid -year, as electricity discoveries fade, but the basic inflation is expected to remain a decree of about 2.6 % in the coming years.

All of this, this did not indicate a little little to reduce the prices of the central bank at the next policy meeting from 29 to 30 September, as the labor market remained flexible, with unemployment at a historical low rate of 4.2 %.

On Wednesday’s report submitted some updates on the services sector for a quarter. Pricing growth in restaurant meals, food and visual optical services accelerate ready -made meals.

New housing prices increased by 0.7 % in 12 months to August, an increase of 0.4 %, as it seems that the ninth rush in the housing sector has stopped.

“The only path is likely to depend on the status of the labor market by November,” said Phil Odonago, the chief economist in Deutsche Bank.

“There may be another weak printing sufficient to persuade the board of directors that it can proceed to reduce prices, but the fluctuations inherent in the monthly labor market make it a high obstacle, so we believe that the probability of reducing November is now less than 50 %.”

(I participated in the reports of Stella Chey and Winan Cole; edited by Shri Navarenam, Clarence Fernandez and Kim Kogel)