Inflation higher than expected but RBA rate cut still on cards

Australia’s inflation figures have come in a little higher than expected, potentially throwing a spanner into expectations of the Reserve Bank cutting interest rates next month . In the March quarter, prices rose by a higher-than-expected 0.9 per cent, with the annual rate steady at 2.

4 per cent. The trimmed mean inflation rate of 2.9 per cent is its lowest level since the December quarter of 2021 , and fell by 0.



4 percentage points over the past three months. The key measures of underlying inflation were 0.7 per cent, in line with the Reserve Bank’s forecasts, with the trimmed mean at 2.

9 per cent and the weighted median at 3 per cent. The biggest factor in the figures was the end of an electricity subsidy in Queensland. Nationally, power prices jumped by 16.

3 per cent in the quarter, but without the end of Queensland’s $1000 subsidy, electricity prices would have lifted by just 0.4 per cent. It meant Brisbane’s inflation rate jumped 1.

9 per cent to 2.7 per cent for the year. Inflation in Sydney and Melbourne was at 2.

3 per cent, while it is now at 1.4 per cent in Hobart and 1.7 per cent in Darwin.

Food prices were up 1.2 per cent in the quarter, housing lifted by 1.7 per cent, while there was a large 5.

2 per cent jump in education. Services inflation fell to 3.7 per cent, its lowest level since June 2022.

The annual inflation rate for insurance fell to 7.6 per cent after hitting 16.4 per cent a year ago.

Rents inflation also eased, edging down to 5.5 per cent after being at 7.8 per cent in the March quarter of last year.

Despite the slightly higher than expected result, markets are still expecting a rate cut on May 20. Treasurer Jim Chalmers. Credit: Catherine Strohfeldt.