Australia Core Consumer Prices Rise 0.6%, Matching Forecasts

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Australia’s core consumer prices matched economists’ forecasts last quarter, leaving the central bank with room to lower interest rates further if necessary.

The trimmed-mean gauge of core prices rose 0.6 percent from the previous quarter, the Bureau of Statistics said Wednesday, matching the median forecast of 23 economists. The consumer price index advanced 0.7 percent from the prior three months, compared with economists’ forecast for a 0.8 percent increase.

“Today’s second-quarter inflation report coupled with the leading indicators of inflation will not be a trigger for easing but rather gives the RBA scope to move if or when activity disappoints,” said Su-Lin Ong, head of Australian economic and fixed-income strategy at Royal Bank of Canada in Sydney.

Reserve Bank of Australia Governor Glenn Stevens has cut the benchmark interest rate twice this year to a record-low 2 percent. Policy makers are trying to reinvigorate domestic industries to spur hiring as they seek to extend 24 years of growth and are likely to look through inflation driven higher by a weaker currency and higher oil price.

“‘A period of somewhat disappointing, even if hardly disastrous, economic growth outcomes, and inflation that has been well contained, has seen interest rates decline to very low levels,’’ Stevens said in a speech Wednesday. ‘‘The question of whether they might be reduced further remains, as I have said before, on the table.’’

Domestic Inflation

Non-tradables, or domestic inflation for goods and services that aren’t imported such as fast food and utilities, climbed 0.5 percent from the previous quarter, the report showed. Tradables, such as imported electrical goods and clothing, rose 1.2 percent.

The currency, which has declined by more than 21 percent in the past year, was buying 73.75 U.S. cents at 1:11 p.m. in Sydney down from 74.19 immediately before the report.

The price of oil rebounded 25 percent last quarter from a six-year low; it has since retraced some of the gains as Iran’s plan to regain market share bolstered speculation a global glut will persist.

Today’s report showed automotive fuel prices rose 12.2 percent in the second quarter while medical and hospital services costs gained 4.5 percent. Domestic holiday travel and accommodation fell 5.4 percent, it showed.

First-Quarter Revision

The weighted-median gauge of inflation, a second core measure that excludes the largest price increases and declines, advanced 0.5 percent in the second quarter, compared with economists’ estimates for a 0.6 percent gain.

The quarterly increase in the trimmed-mean measure in the first quarter was revised to 0.7 percent from 0.6 percent while the increase in the weighted median was revised to 0.8 percent from 0.6 percent in the same quarter.

The trimmed-mean gauge advanced 2.2 percent from a year earlier, compared with economists’ forecasts for a 2.1 percent gain. The weighted median increased 2.4 percent in the 12-month period versus an estimated 2.3 percent rise, the report showed.

The central bank aims for inflation of between 2 percent and 3 percent on average. The CPI increased 1.5 percent in the second quarter from a year earlier, compared with economists’ forecast for a 1.7 percent increase.

The statistics bureau also released a seasonally adjusted consumer price index that showed an 0.8 percent increase last quarter, for an annual gain of 1.5 percent.

The RBA is trying to rebalance the economy away from mining in the north and west as investment wanes, and stimulate manufacturing, residential construction and consumption in the nation’s south and east.

It may be reluctant to lower borrowing costs further amid surging property values. Sydney home prices climbed 16.2 percent in June from a year earlier, a private index showed.

Moreover, Australia’s jobless rate stood at 6 percent last month as employers boosted hiring, spurring optimism the RBA’s effort to shore up the economy could be starting to pay off.

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