Australia’s annual inflation rate dropped to 3.7% in February, contrary to economists’ expectations of it staying at 3.8%. The consumer price index (CPI) increased by 3.7% in the year leading to February, down from the 3.8% reported in the previous months.
Official data from the Australian Bureau of Statistics (ABS) revealed that the annual trimmed mean, a key inflation measure favored by the Reserve Bank of Australia (RBA), held steady at 3.3% in February, surpassing the central bank’s target range of 2-3%.
Following the recent decision by the RBA’s Monetary Policy Board to raise the official cash rate to 4.1% for the second consecutive month on March 17, the ABS data indicated that higher fuel prices due to the Middle East conflict would contribute to inflation.
Treasurer Jim Chalmers, in response to the ABS figures, expressed concerns about escalating inflation worsened by the ongoing conflict. Chalmers had previously warned that prolonged conflict might push inflation above 5.0% by 2026 and mentioned exploring diverse strategies to tackle inflation at a recent business event.
The ABS highlighted a 7.2% surge in housing prices as the primary driver of inflation in the year up to February, followed by a 3.1% increase in food and non-alcoholic beverage prices.
