Australian Inflation Data Causes Headache for RBA

A surprise spike in Australia’s inflation rate will give the nation’s central bankers pause for thought, analysts say, making it trickier to decide between keeping rates low to stimulate the economy and raising rates to pour cold water on frothy price rises.

Consumer prices rose 0.8 percent in the fourth quarter of 2013, taking annual inflation to 2.7 percent, at the upper end of the Reserve Bank of Australia’s target of between 2 and 3 percent. Sharp increases in the price of fruit and vegetables, travel costs and tobacco were behind the overall increase.

Australian stocks slipped 0.7 percent on the news, while the Australian dollar strengthened to $0.8855 against the dollar, retreating from Monday’s three-and-a-half-year low. The 15 percent fall in the Aussie over the past year has been a key factor behind rising prices, increasing the cost of imports.

CNBC

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.