Australia's monthly CPI in February eased from 7.4% Y-o-Y to 6.8% Y-o-Y, below expectation of 7.2% Y-o-Y. CPI excluding volatile items such as fruit, vegetables, and automotive fuel also slowed from 7.5% Y-o-Y to 6.9% Y-o-Y. This marks the second consecutive month of lower annual inflation, also known as 'disinflation', from the peak of 8.4% in December 2022.
Although inflation remains well above RBA's target band of 2-3%, the start of disinflation process could increase the likelihood of a pause in the RBA's tightening cycle during their next meeting. The continued easing of inflationary pressures may prompt the central bank to take a more cautious approach in the near term.
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