Australia CPI falls to 3-year low in August; core inflation sticky By Investing.com

Investing.com– Australian consumer price inflation eased as expected in August, falling to a three-year low following government plans aimed at curbing high energy costs, while core inflation was less evident.

grew by 2.7% year-on-year, data from the Australian Bureau of Statistics showed on Wednesday. The reading was in line with expectations and down significantly from the 3.5% seen last month.

Core inflation – which excludes volatile items such as fuel, fresh food and holiday spending – fell to 3% in August from 3.7% the previous month. Annual cut inflation – which excludes volatile items – fell to 3.4% in August from 3.8% in July.

Headline inflation hit its lowest level since August 2021, falling within the Reserve Bank of Australia's annual target of 2% to 3%.

Inflation in August was largely driven by government programs aimed at curbing high electricity and fuel prices.

But while CPI inflation fell below the RBA's annual target, the central bank said on Tuesday that such a trend was expected to be temporary, and inflation was expected to continue in the coming months. The bank had kept interest rates steady and maintained its hawkish outlook.

The RBA only expects CPI inflation to continue to reach its target range in 2026, and is expected to keep interest rates high until at least the first quarter of 2025.

CPI inflation readings remained high and above the RBA's target range, although they also hit their lowest levels in 2-½ years.