Australia's Headline Inflation Rate Falls Back to Target

By James Glynn

SYDNEY--Australia's headline inflation rate fell to within the Reserve Bank of Australia's target band for the first time since 2021 in August, but economists warn that this won't trigger an immediate interest-rate cut.

Consumer prices rose 2.7% in the year to August, down from 3.5% on year in July, the Australian Bureau of Statistics said Wednesday. The result was in line with market expectations.

Inflation has been above the 2% to 3% target since August 2021 when prices surged globally as the world recovered quickly from years of pandemic-led disruptions, fueled by massive amounts of government monetary and fiscal stimulus.

The big fall in inflation was in large part due to the payment of electricity bill rebates to households midyear, with federal and state governments moving to ease surging living costs.

The combined impact of federal energy bill relief fund rebates and state government rebates in Queensland, Western Australia and Tasmania, drove electricity prices down 17.9% from a year ago--the biggest fall on record.

Fuel prices were also 7.6% lower than a year ago, the ABS said.

While headline inflation is falling, RBA Gov. Michele Bullock said on Tuesday that policymakers remain anxious about elevated core inflation, adding that interest cuts are not on the cards in the near term.

Annual trimmed mean inflation, which excluded both the falls in fuel and electricity, rose 3.4% in August, the lowest in 2.5 years.

Write to James Glynn at james.glynn@wsj.com; @JamesGlynnWSJ

(END) Dow Jones Newswires

September 24, 2024 22:17 ET (02:17 GMT)

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