Australia Inflation Eases In May

(RTTNews) - Australia's consumer price inflation eased in May on cooling fuel prices but core inflation strengthened further and remained above the central bank target, adding chances of an interest rate hike.

Consumer prices increased 4.0 percent on a yearly basis in May, slower than the 4.2 percent rise in April, the Australian Bureau of Statistics reported Wednesday.

This was the slowest inflation in three months and came in below economists' forecast of 4.3 percent.

Meanwhile, trimmed mean inflation rose to 3.6 percent, the highest since September 2024, from 3.4 percent in April. Automotive fuel was excluded from the trimmed mean in March, April and May.

The largest contributor to the CPI inflation was housing, which climbed 6.5 percent due to rising costs of electricity, new dwellings and rents.

Electricity costs surged 21.1 percent as government rebates that reduced electricity costs for households were no longer in place.

Food and non-alcoholic beverages prices grew at a faster pace of 3.3 percent. On the other hand, the increase in transport cost halved to 3.3 percent from 6.6 percent in April.

Automotive fuel prices moved up only 7.7 percent after rising 18.6 percent in the previous month.

While the annual growth in goods prices slowed to 4.2 percent from 4.7 percent, services inflation advanced to 3.7 percent from 3.5 percent.

Month-on-month, consumer prices registered a 0.7 percent fall, in contrast to the 0.4 percent increase in April, data showed. Last week, the Reserve Bank of Australia left its key interest rate unchanged at 4.35 percent after three consecutive rate hikes.