Australia’s latest inflation figures have shown an unexpected jump, serving as a reminder that inflation remains volatile. Russel Chesler from VanEck noted that the annual inflation and trimmed mean readings were well above expectations. VanEck is an investment management firm providing a range of exchange-traded funds (ETFs). The company focuses on delivering investment solutions across various asset classes, sectors, and geographies.
Housing costs, significantly impacted by electricity price rises and the conclusion of rebates in New South Wales and the Australian Capital Territory, rose 3 per cent. Food prices also experienced a substantial increase, jumping 14.4 per cent over the year, with coffee, tea, and cocoa contributing to the rise.
Chesler explained that the monthly Consumer Price Index (CPI) offers a snapshot of specific sectors, rather than a comprehensive measure of broader inflation trends. The Reserve Bank of Australia (RBA) continues to prioritise quarterly reports for policy decisions. Chesler stated that the recent inflation spike, coupled with the recent interest rate cut and continued strength of the labour market, reinforces the expectation that another rate cut is unlikely before November.
Despite the surprising increase in inflation, Chesler does not anticipate a material impact on markets or the broader economy. He pointed to the robust performance of the ASX, which recently hit 9,000 points, and the strength of global equities as evidence of ongoing investor confidence.
