Inflation held steady last month, buoying hopes that the Reserve Bank can move to cut interest rates this year.
Consumer prices rose 3.4 per cent in February from a year earlier, the Australian Bureau of Statistics said on Wednesday.
That reading was the same as January’s result, and was slightly below economists’ forecasts of a 3.5 per cent increase.
However, following bumper jobs data released last week, the softer-than-expected inflation reading is unlikely to change the RBA governor Michele Bullock’s resolve to “wait and see” how the central bank’s aggressive run of 13 rate hikes flows through the economy before she moves to cut interest rates.
Meanwhile, the RBA’s preferred measure of underlying price pressures – trimmed mean inflation, which strips out volatile items such as food and petrol – rose to 3.9 per cent, up from 3.8 per cent in January.
Addressing the media earlier this month after the RBA left the cash rate on hold at 4.35 per cent, Ms Bullock warned that evidence from overseas showed bringing inflation to a heel may be a “bumpy ride”.
“The war isn’t yet won. So we continue to be vigilant, and we can’t rule anything in or out,” she said.
Ahead of its next interest rate decision, scheduled for May 7, the central bank will receive a broader reading of the price pressures across the economy for the March quarter.
Inflation has cooled markedly over the past 12 months as the RBA has tightened the economy to bring price growth within its 2 to 3 per cent target band.
In the year to February 2023, prices surged by 6.5 per cent on the back of supply chain disruptions, labour shortages and soaring aggregate demand.
More to come.