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>>Australian inflation shock: January CPI jumps to 3.8%, beating analyst forecasts

Australian inflation shock: January CPI jumps to 3.8%, beating analyst forecasts

crypthub

about 5 hours ago

Inflation Surprise

Australia’s CPI rose 3.8% YoY in January 2025, beating the 3.7% forecast. The increase follows a 3.6% reading in December and signals renewed price pressure. Core drivers were housing, food, and transport costs.

RBA Policy and Market Reaction

The data pushed government bond yields higher and strengthened the Australian dollar. Swap markets now see under 20% chance of a rate cut this quarter, down from 40%. Analysts expect the RBA to keep the cash rate at 4.35% into mid‑2025, with possible further tightening.

Sectoral Impact

Housing costs climbed sharply, with rents up 7.2% and new‑dwelling prices 4.1% YoY. Services inflation hit 4.2% versus 3.4% for goods, reflecting persistent wage growth. Higher financing costs may curb business expansion and shift households toward essentials.

Global Context and Outlook

Australia’s inflation remains above the US (2.5%) and Eurozone (2.3%) but mirrors Canada and New Zealand. Forecasts now project CPI at 3.0% by year‑end 2025, pushing the return to the 2‑3% target to late 2025 or early 2026. The outlook suggests continued pressure on households and policy makers.