Australian Consumer Inflation Expectations Weaken to 3.8%

Inflation expectations among Australian consumers declined in September for a second consecutive month, a private survey reported Thursday.

The Melbourne Institute’s 12-month gauge of inflation expectations fell to 3.8% in September, following a reading of 4.2% the previous month.

The Melbourne Institute’s monthly report is closely watched by the financial markets because inflation expectations have a tendency of affecting actual price growth.

Consumer prices in Australia weakened to an annualized 1.9% in the second quarter, government data showed earlier this summer. Annual inflation reached 2.1% between January and March, the strongest reading since mid-2014.

Second-quarter growth was broadly in line with the consensus, as consumer and government spending supported the economy. Gross domestic product (GDP) grew at an annualized 1.8% in Q2.

Last week, the Reserve Bank of Australia (RBA) voted to keep monetary policy on hold amid growing signs of a housing slowdown. The RBA has held its overnight cash rate at a record low of 1.5% since August 2016 when it lowered it by 25 basis points.

Record low wages and weak underlying inflation have also kept policymakers on the sidelines for the past year.

Sam Bourgi is a financial market analyst for economiccalendar.com. He has more than six years of progressive experience in economic and financial analysis, research consulting and sectoral analysis. As a published author in government, peer-reviewed, online and industry sources, he has developed a fundamental approach to the financial markets with a broad focus on stock indices, commodities and the technology sector. He earned his Bachelor’s Degree from the University of Windsor and Master’s degree from McMaster University.