AUSTRALIA SURVIVES SOLD OUT TAYLOR SWIFT SHOWS WITHOUT SPIKE IN INFLATION
SYDNEY—Australia survived sold-out Taylor Swift concerts in Sydney and Melbourne without a spike in inflation as travel and hotel costs in other parts of the vast country swung lower in February, leaving interest rates on track to be cut later in the year.
Data from the Australian Bureau of Statistics on Wednesday showed its monthly consumer price index (CPI) rose at an annual pace of 3.4 percent in February, unchanged from January and under forecasts of 3.5 percent.
For the month, CPI rose 0.2 percent. The three-month annualized pace is 2.4 percent, within the central bank’s target band of 2 percent to 3 percent.
The Australian dollar eased 0.2 percent to $0.6519 and three-year bond futures bounced from earlier lows to be up two ticks to 96.42, while markets continued to bet that any rate relief would likely start in August or September.
“While it may appear that inflation has bottomed out, base effects over the coming months should make it easier for inflation to resume its descent,” said Rob Carnell, Asia-Pacific head
of research at ING, adding it raised the possibility for some monetary easing later this year.
However, a closely watched measure of core inflation was proving stickier. The trimmed mean rose an annual 3.9 percent, up slightly from 3.8 percent in January. Policymakers had forecast the gauge to fall to 3.6 percent by June.
Markets imply around a 68-percent chance the Reserve Bank of Australia (RBA) will cut its 4.35 percent cash rate by a quarter point in August, while a move is fully priced in for September. Futures imply a relatively modest 40 basis points of easing for all of 2024.
The Taylor Swift effect that drove up travel and hotel-related costs in the country’s biggest cities had some analysts looking for an uptick in headline inflation in February.
“Although Taylor Swift performances saw hotel prices rise in Sydney and Melbourne, elsewhere accommodation and airfare prices fell in February due to the end of the peak travel during the January school holiday period,” said Michelle Marquardt, ABS head of prices statistics.
Holiday travel and accommodation prices fell by 9.3 percent in February from the previous month, helping to offset gains in fuel, education and clothing.
Prices for tradable goods were all but flat in the month, while nontradable items that are mainly services rose 0.3 percent.
Rents, insurance rise
Slowing inflation is one reason that the RBA kept interest rates unchanged at 4.35 percent for a third straight meeting this month and softened its stance by dropping a tightening bias.
RBA Governor Michele Bullock has not ruled anything in or out on policy, saying risks are “finely balanced.”
The labor market appears to remain strong, with data showing the economy added a staggering 116,500 jobs in February and the jobless rate ticked down to 3.7 percent from a twoyear high of 4.1 percent.
The February CPI report, which provided an update on more services in the first quarter of the year, showed prices for hairdressers, restaurant meals and takeaway food were up 7 percent, 4.4 percent and 6.6 percent annually.
Rent inflation accelerated to 7.6 percent in February from 7.4 percent the previous month, while insurance prices rose 8.4 percent from a year ago, speeding up from 8.2 percent in January.
“For us, at least the data doesn’t have too much in the way of implications in terms of our rate call, which is for the RBA to move in November,” said Tapas Strickland, head of market economics at National Australia Bank.