Inflation Eases Ahead of Upcoming Interest Rate Decision
- admin928749
- Mar 26
- 2 min read
Good news for Aussies—inflation has eased again, just in time for the Reserve Bank of Australia (RBA) to consider its next interest rate decision.
Fresh data from the Australian Bureau of Statistics (ABS) shows inflation slowed to 2.4% over the 12 months to February. That’s down from 2.5% in January and well within the RBA’s target range.
A couple of key inflation measures also dropped:
CPI (excluding volatile items and holiday travel) fell from 2.9% to 2.7%
Trimmed mean inflation (the RBA’s preferred measure) also dropped to 2.7%
This is the lowest inflation has been since October, and the trimmed mean is back to levels we last saw in late 2021.
So what does this mean for interest rates?
The RBA is set to make its next decision on April 1, but most experts believe a rate cut next week is unlikely—especially since these are monthly figures (quarterly CPI, which carries more weight, won’t be released until late April).
Before today’s inflation update, economists were 92% certain the cash rate would stay put at 4.10% next week. That hasn’t really changed, but the numbers do make the case for a potential rate cut in May.
Market analyst Josh Gilbert (eToro) weighed in:
“There’s unlikely enough in today’s release to force the RBA’s hand next month, but it does set the stage for a May rate cut.”
The biggest price increases last month came from:
Housing → Up 1.8%
Food & drink → Up 3.1%
Alcohol & tobacco → Up 6.7%
On the bright side, energy prices are continuing to drop, helped by government rebates. In fact, electricity prices fell by 13.2% in the past year—without rebates, the drop would have been just 1.2%.
And speaking of rebates, the federal government just added $1.8 billion to the budget to extend them until the end of the year.
So while we’re not quite at the point of interest rate cuts, inflation is definitely trending in the right direction. Now, all eyes are on April’s quarterly CPI data—that’s when we’ll get a clearer picture of where things are heading.
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