The statistics bureau also updated historical figures for the series to include electricity prices, which grew at a faster clip of 17.2% in February. Analysts at ANZ still expect the RBA to hike rates in April, citing recent data releases including a strong labour force report, resiliant business conditions and solid spending on services. "While the RBA has signalled its intention to pause at some point in coming months, we continue to think that the data is not yet consistent with a pause," they said. RBA Governor Philip Lowe has said the central bank was closer to pausing its rate increases because monetary policy was now in restrictive territory, and suggested a halt could come as soon as April depending on the data. (Reporting by Stella Qiu; Additional reporting by Wayne Cole; Editing by Christian Schmollinger, Sam Holmes and Edmund Klamann)
Messaging: wayne.cole.thomsonreuters.com@reuters.net)) (Adds changes in electricity prices, comments from ANZ
analysts)
By Stella Qiu
SYDNEY, March 29 (Reuters) - Australian inflation slowed
to an eight-month low in February, due in part to a sharp
retreat in prices for holiday travel and accommodation,
bolstering the case for a pause in interest rate hikes next
month.
Data from the Australian Bureau of Statistics on
Wednesday showed its monthly consumer price index (CPI) rose
6.8% in the year to February, the slowest rise since June of
last year. That compared with 7.4% the previous month and market
forecasts of 7.1%.
The monthly CPI index rose 0.2% in February from
January. Prices excluding volatile fruit, vegetables and fuel
rose 6.9% in the year to February, down from 7.5% in January.
Investors reacted by pushing the local dollar 0.2% lower to $0.6694, while further trimming bets of a 25-basis
point hike from the Reserve Bank of Australia at the next policy
meeting to just a 5% probability, compared with 15% before. They had all but priced out any chance of a further hike in
the cash rate, which currently stands at an 11-year high of
3.6%, after turmoil in the global banking sector threatened to
sharply tighten financial conditions.
"The further sharp fall in inflation coupled with the
softness of consumption will probably prompt the Reserve Bank of
Australia to pause its tightening cycle next week," said Marcel
Thieliant, a senior economist at Capital Economics.
Thieliant added that he still expected the RBA to hike for
one last time in May.
Data showed that retail sales levelled off in February,
suggesting consumers are reining in spending in the face of
higher living costs and rising interest rates.
Wednesday's data showed inflation in February had been
dragged down by a monthly 14.6% drop in costs for holidays and
travel, as well as the slowest annual increases in a year for
new dwellings and a levelling off in rent increases at 4.8%.
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