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>>Australia's consumer price inflation jumps to 3.8% in January, surprising forecasts and challenging the RBA's determination

Australia's consumer price inflation jumps to 3.8% in January, surprising forecasts and challenging the RBA's determination

crypthub

about 6 hours ago

Inflation Surge

The Australian CPI rose 3.8% YoY in January 2025, topping the 3.7% forecast and December’s 3.5% reading. Monthly CPI increased 0.5% seasonally adjusted, driven by 5.2% housing cost growth and a 4.1% rise in food prices. Services inflation stayed high at 4.3%, while insurance and education costs also jumped.

Market Reaction

Bond yields climbed, with three‑year yields up 12 basis points, and the Aussie dollar gained against major currencies. The ASX 200 fell 0.8% before partially recovering, reflecting worries about sustained higher rates. Investors now price fewer rate cuts for 2025.

Policy Implications

The RBA is likely to keep rates restrictive, delaying any cuts as inflation remains above target. Governor Bullock stresses a data‑dependent stance, while household debt near a record 188% of disposable income raises financial stability concerns. Forecasts now expect only 25 basis points of cuts in 2025, down from earlier expectations.

Broader Impact

Higher prices are curbing discretionary spending, with 68% of families cutting non‑essential purchases and savings falling to 4.2% of disposable income. Regional inflation varies, hitting 4.1% in Western Australia and 3.4% in Tasmania. Internationally, Australia’s inflation exceeds the US (3.2%) and Eurozone (3.1%) but mirrors New Zealand’s 3.9%, highlighting global pressure on domestic price dynamics.