Inflation jumps to 4%

26 June, 2024

Australian inflation jumped to 4% in May, the highest rate this year, from 3.6% in April. The increase was largely driven by volatile items such as fuel, fruit and vegetables, and holiday travel. Excluding these volatile items, underlying inflation fell slightly from 4.1% to 4.0%.

The last time inflation was higher was in November when it reached 4.3%.

Michelle Marquardt of Statistics Australia highlighted the impact of volatile data on the CPI and stressed the importance of excluding it when measuring trends in underlying inflation.

Despite calls for interest rate cuts to help households, the Reserve Bank of Australia remains cautious. Michele Bullock said that a sustained reduction in inflation is needed to achieve the 2-3% target range, and indicated that the bank is prepared to take the necessary steps to achieve this. This is being interpreted by many as an indication of an imminent cash rate hike in the near future.

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