Investing.com– Australian consumer price index inflation eased as expected in August, hitting a three-year low following government programs aimed at curbing high energy costs, while declines in core inflation were much less pronounced.
CPI inflation grew 2.7% year-on-year, data from the Australian Bureau of Statistics showed on Wednesday. The reading was in line with expectations and eased sharply from the 3.5% seen last month.
Core inflation- which excludes volatile items such as fuel, fresh food and holiday spending, fell to 3% in August from 3.7% in the prior month. Annual trimmed mean inflation- which excludes more volatile items- fell to 3.4% in August from 3.8% in July.
Headline inflation hit its lowest level since August 2021, also falling within the Reserve Bank of Australia’s 2% to 3% annual target.
The softer inflation print for August was driven chiefly by government programs aimed at curbing high electricity and fuel.
But while CPI inflation did fall within the RBA’s annual target, the central bank said on Tuesday that such a trend was expected to be temporary, and inflation was set to pick up in the coming months. The bank had kept interest rates steady and maintained its hawkish outlook.
The RBA only expects CPI inflation to sustainably reach its target range by 2026, and is expected to keep interest rates elevated until at least the first quarter of 2025.
Core CPI inflation readings remained elevated and above the RBA’s target range, although they also hit their lowest levels in 2-½ years.
