July 23 (Bloomberg) -- Australian wholesale price inflation accelerated last quarter for the first time in more than a year, driven by higher import prices and agriculture and petroleum refining costs.
The producer price index advanced 0.5 percent in the April-to-June period from the prior quarter, when it dropped 0.3 percent, the Bureau of Statistics said in Sydney today. The median estimate of 18 economists surveyed by Bloomberg News was for a 0.3 percent increase. The index rose 1.1 percent in the second quarter from a year earlier, higher than the median forecast of 1 percent.
Reserve Bank of Australia Governor Glenn Stevens lowered the benchmark interest rate by a total of 75 basis points in May and June to help insulate the economy from Europe’s woes, before pausing this month citing stronger domestic growth momentum. The Australian dollar slipped in the second quarter and inflation probably quickened in the period, a survey of economists showed before a July 25 government report.
“The idea for the consumer price inflation numbers is that you’re going to get an acceleration,” said Ben Jarman, a Sydney-based economist at JPMorgan Chase & Co. who predicts a 0.6 percent increase, in line with the median estimate. “It’s going to leave the RBA in a bit of a difficult position, particularly with the global backdrop looking as it does -- it’s likely Europe is flaring up again.”
The Australian dollar stayed lower after the data, trading at $1.0316 as of 12:21 p.m. in Sydney from $1.0322 before the data.
The report showed the cost of some agricultural goods gained 10.9 percent while petroleum refining increased 4.3 percent. Commercial fishing prices sank 12.2 percent and accommodation declined 5.6 percent, it showed.
Prices of domestically produced products grew 0.3 percent, while imports advanced 1.9 percent, the report showed.
Traders are pricing in an 88 percent chance the RBA will lower its overnight cash-rate target by a quarter percentage point to 3.25 percent on Aug. 7, according to data compiled by Bloomberg based on swaps trading.
Economists predict government figures scheduled to be released in two days will show a measure of core consumer prices rose 0.6 percent in the second quarter, lowering the annual rate to 1.9 percent, below the central bank’s 2 percent to 3 percent target range.
The consumer price index increased 0.6 percent in the three months through June for annual inflation of 1.3 percent, according to the Bloomberg News survey of economists.
Economists caution the producer price index doesn’t have much correlation with the CPI because the two have different weighting patterns.
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