By MarketWatch
LOS ANGELES (MarketWatch) -- Australia's quarterly consumer price figures rose less than economists expected, according to data released Wednesday, trimming the likelihood for another central-bank rate hike anytime soon.
Reuters
The consumer price index rose 0.6% in the second quarter, with the gauge up 3.1% from the year-earlier quarter, the Australian Bureau of Statistics said.
Much of the increase was due to a 15.4% quarter-on-quarter rise in tobacco in the wake of a hike in taxes on tobacco products, as well as a 3.8% gain in medical-service prices and a 2.1% increase in automotive fuel.
The price rises were smaller than the 1.0% quarterly increase and 3.4% year-on-year climb that economists had expected, according a survey reported by Dow Jones Newswires.
Perhaps more important, the central bank's "trimmed mean" and "weighted median" consumer inflation measures -- which seek to strip out some volatility in the data -- were at 2.7% from the year-ago quarter and 0.5% from the April-June period.
Euro less likley to sustain break over $1.30
Not only did the bank stress tests fail to boost investor confidence but the impact of recent economic data helping the euro against the dollar is likely to subside.
In minutes from the Reserve Bank of Australia's policy meeting earlier this month, the central bank said the second-quarter inflation readings would play a key role in deciding if and when to increase interest rates further.
The RBA had correctly predicted its underlying inflation measures for the quarter to be under 3% for the first time in three year, although the headline number would breach that level. See full report on the Reserve Bank of Australia's July minutes.
A Reuters survey had tipped the two central-bank measures to print at 3.0%, and the smaller-than-expected result suggested that the RBA will keep its policy rate unchanged when it meets Aug. 3.
"Overall, the retreat of both [underlying inflation] measures on an annual basis to back inside the RBA's 2% to 3% target band should be well received by the RBA," said analysts at Action Economics. "We expect the bank to leave rates steady at 4.50% next week."
Australia's benchmark S&P/ASX 200 index turned negative after the data release, trading down 0.1%, while the Australian dollar fell to 89.41 U.S. cents, down 0.7% from its early-morning level.
More Economic Report
| Sept. 8, 2010 | German industrial production edges higher | |
| Sept. 3, 2010 | Smaller-than-feared 54,000 Aug. nonfarm jobs lost | |
| Sept. 3, 2010 | Services growth slows in August, ISM says | |
| Sept. 3, 2010 | British service-sector growth loses momentum | |
| Sept. 2, 2010 | Weekly U.S. jobless claims drop 6,000 to 472,000 |
Chuck Jaffe
On Mutual Funds