Australia’s February CPI cooled barely to three.7% y/y from 3.8%, with the month-to-month print coming in flat at 0.0%, only a contact softer than anticipated.
The trimmed imply rose 0.2% m/m, lacking the 0.3% forecast, whereas the annual tempo held at 3.3%.
This knowledge got here out earlier than the U.S.-Iran war-driven vitality shock, preserving inflation dangers tilted to the upside and the Aussie below strain.
Key Takeaways
- Headline CPI rose 3.7% within the 12 months to February, easing from 3.8% in January, with the month-to-month studying flat at 0.0%
- Trimmed imply inflation held regular at 3.3% yearly, unchanged from January
- The biggest annual contributors had been Housing (+7.2%), Meals and non-alcoholic drinks (+3.1%), and Recreation and tradition (+4.1%)
- Electrical energy surged 37.0% over the yr, primarily as a result of expiry of Commonwealth and State Authorities vitality rebates
- Information predates the Iran conflict’s vitality shock; headline inflation is extensively anticipated to push towards 5% within the coming months
Hyperlink to official ABS Australian Client Worth Index (February 2026)
Housing remained the most important annual driver, up 7.2%, with electrical energy costs surging 37.0% as authorities rebates rolled off. Automotive gas, in the meantime, fell 7.2% on the yr, nonetheless reflecting pre-Center East battle pricing.
The combination confirmed up within the broader breakdown. Companies inflation held at 3.9%, items eased to three.5%, whereas non-tradables ticked as much as 5.0%.
Even so, this snapshot might already be outdated. The report doesn’t but seize the current surge in vitality costs, with headline inflation anticipated to climb towards 5% within the coming months.
All these assist clarify the RBA’s stance. The central financial institution simply delivered its second straight charge hike, taking the money charge to 4.1%, with Governor Michele Bullock warning that inflation stays too excessive and flagging issues about second-round results from rising vitality prices.
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Market Reactions
Australian Greenback vs. Main Currencies: 5-min
AUD Overlay 5-min – Chart Quicker with TradingView
The Australian greenback, which leaned barely bullish early within the day, briefly ticked increased after the sticky inflation print. Nonetheless, AUD turned decrease about quarter-hour later, then stayed on the again foot for roughly an hour and a half after the discharge.
AUD then settled into a spread earlier than choosing up some bids forward of the London open. Merchants largely regarded by way of the CPI because it predates the Iran battle, which is predicted to drive a pointy rise in gas costs within the March report. The vitality shock, not the February knowledge, drove sentiment, with markets reluctant to carry AUD longs given the inflation dangers forward.
The Aussie is now again to a internet bearish lean, with features exhibiting up solely towards the Swiss franc and the New Zealand greenback.
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Expectations of sticky excessive inflation and a excessive rate of interest surroundings in Australia saved AUD on the defensive early Wednesday. When the macroeconomic knowledge shifts this quick, buying and selling the volatility requires deep focus—and sufficient capital to make your edge rely.
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