Australian Inflation Holds at 4% in March, TD Says
An index measuring Australian inflation held at the fastest annual pace in almost two years in March, reinforcing the central bank's decision to increase borrowing costs to the highest in 12 years.
Consumer prices surged 4 percent from a year earlier, breaching the 3 percent limit of the Reserve Bank of Australia's target range, according to a monthly gauge released by TD Securities Ltd. and the Melbourne Institute in Sydney today. Prices climbed 0.4 percent from February, when they rose 0.3 percent.
More expensive financial services, food, gasoline and property rents drove prices higher, today's report shows. Central bank Governor Glenn Stevens increased the benchmark interest rate by a quarter point to 7.25 percent on March 4, the fourth increase in seven months.
“The Reserve Bank will remain concerned with the run of inflation'' which also shows “few if any signs of topping out,'' said Joshua Williamson, a senior strategist at TD Securities in Sydney. “It's important to recall that the economy and inflation have not yet had time to react to the two most recent official interest-rate increases.''
The Australian dollar traded at 91.43 U.S. cents at 10:37 a.m. in Sydney from 91.48 cents just before the report was released. The two-year government bond yield rose 1 basis point to 6.26 percent. A basis point is 0.01 percentage point.
Interest Rates
Central bank policy makers will probably leave the overnight cash rate target unchanged tomorrow to gauge fallout from the global credit squeeze, the worst quarterly slump on the nation's stock market since 1987 and waning consumer confidence, according to all 24 economists surveyed by Bloomberg News on March 28 paydayloans.com free credit report without a credit card.
Twelve economists say the bank will raise rates in May. Policy makers will announce their decision at 2:30 p.m. in Melbourne tomorrow.
“Inflation pressure remains strong, driven by solid price rises for some basic household items,'' Williamson said.
Gasoline in the 12 months through March rose 12.4 percent and the price of rental accommodation climbed by more than 12 percent, today's report showed. The gains were partially offset by declines in prices for furniture, home entertainment equipment and telephone costs.
The Melbourne Institute is a research unit of Melbourne University and TD Securities is a division of Toronto-Dominion Bank, one of Canada's largest banks. The monthly inflation index measures the prices of 1,000 goods and services.
The government reports its official inflation measure, the consumer prices index, on a quarterly basis. The next CPI report will be released on April 23.
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