Consumer Price Index Rises to 4.3 Per Cent in September
Australia’s annual inflation rate accelerated to 4.3 per cent in September, up from 4 per cent in August, according to data released by the Australian Bureau of Statistics and reported by ABC News. The consumer price index rose by 0.8 per cent during the month, outpacing the 0.4 per cent increase recorded the previous month and heightening market expectations of an impending interest rate rise.
Housing emerged as the primary driver of annual price pressures, registering a 5.2 per cent increase, according to ABS head of price statistics Rachael McCririck. The annual trimmed mean, which serves as the Reserve Bank of Australia’s preferred gauge of underlying inflation, ticked up to 3.6 per cent for September following a downward revision of the August figure to 3.5 per cent.
Reserve Bank of Australia Board Convenes Amid Rate Hike Pressures
The latest inflation figures arrive just ahead of the Reserve Bank of Australia’s policy meeting, intensifying pressure on the central bank to tighten monetary policy. Reserve Bank deputy governor Andrew Hauser warned last week that the domestic inflation outlook appeared materially worse than previously forecast by central bank officials.
Financial markets responded swiftly to the consumer price index release. Money markets priced in an 87 per cent probability of a fifth cash rate increase to 4.85 per cent at the central bank’s upcoming meeting, up sharply from 69 per cent prior to the data publication, as reported by the Australian Financial Review. Markets are fully pricing in a rate rise before the Christmas holiday period.
Market Reaction and Financial Sector Performance
Australian shares pared early gains following the release of the hotter-than-expected quarterly inflation data, which pointed to headline inflation reaching 1.3 per cent in the September quarter compared to 0.6 per cent in the preceding three-month period. The S&P/ASX 200 Index trimmed its advance to trade up 38.5 points, or 0.4 per cent, at 888.6 during morning trading, supported by gains in technology stocks and major miners including BHP and Rio Tinto.
The central bank board begins its scheduled monetary policy deliberations on Monday, with the official interest rate decision and updated economic forecasts slated for release on Tuesday afternoon.
The Reserve Bank last altered the cash rate in an economic environment where annual inflation continues to run above the central bank’s targeted band of 2 to 3 per cent.
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