Australia’s May CPI report blew market expectations out of the water, as headline inflation surged from 3.6% to 4.0% year-over-year in May versus the consensus at 3.8%.
Components of the report indicated that the gains were led by price increases in housing, transport, and tobacco.
Link to Australia’s Consumer Price Index report for May 2024
Core inflation, which excludes prices of volatile items and holiday travel, inched down from 4.1% in April to 4.0% in May.
Market Reactions
Australian Dollar vs. Major Currencies: 5-min
Overlay of AUD vs. Major Currencies Chart by TradingView
Aussie pairs had been moving mostly sideways ahead of the release of the Land Down Under’s inflation figures, with a brief dip around an hour before the numbers were printed.
Stronger than expected results sparked a sharp rally across the board, as market analysts predicted that the acceleration in price pressures would dampen the odds of the Reserve Bank of Australia (RBA) sitting on their hands during their next policy meeting.
The Aussie chalked up its largest lead to the Japanese yen, as traders remained wary of yen-tervention moves, while gradually extending its climb a couple of hours after the report.
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