2025.03.2605:17:00UTC+00Australia Inflation Eases Slightly In February

Australia consumer price inflation softened unexpectedly in February, raising hopes of another interest rate cut in coming months.

The monthly consumer price index rose 2.4 percent year-on-year in February, after holding steady at 2.5 percent in the previous two months, the Australian Bureau of Statistics reported Wednesday. Prices were expected climb 2.5 percent in February.

The largest contributors to the annual price growth were food and non-alcoholic beverages, alcohol and tobacco and housing. Annual housing inflation weakened to 1.8 percent due to the fall in electricity prices.

Annual trimmed mean inflation was 2.7 percent in February, which was down slightly from 2.8 percent inflation in January.

Excluding volatile items and holiday travel, inflation rose to 2.7 percent in February from 2.9 percent in January.

The weakness in underlying inflation means that the Reserve Bank of Australia will probably cut rates again by 25 basis points in May and creates some downside risks to the forecast that the Bank will only cut rates to 3.6 percent, Capital Economics economist Marcel Thieliant said.

In February, the Reserve Bank had lowered its benchmark rate for the first time since 2020. The rate was lowered by 25 basis points to 4.10 percent.