SYDNEY, Australia — An expected rise in the inflation rate for the first three months of the year won’t stir the Reserve Bank of Australia from its steady interest rate outlook.
The April 28’s release of the March quarter consumer price index is expected to show a solid 0.9 percent increase due to higher petrol prices, the rising cost of home building and an increase in rents.
It will lift the annual rate of inflation to 1.4 percent compared to just 0.9 percent at the end of 2020, which was the result of last year’s recession.
Underlying inflation, which smooths out wild price swings in the Consumer Price Index and is a key guide to interest rate decisions, is expected to remain relatively subdued, rising around 0.6 percent in the quarter to 1.4 percent annually from 1.2 percent previously.
This would still be way short of what the Reserve Bank of Australia wants to see before it even starts considering lifting the cash rate from its record low 0.1 percent.
The minutes of the Reserve Bank of Australia’s April board meeting reiterated the central bank has no intention of lifting the cash rate until inflation is sustainably within its two to three percent target band, an event that it sees as unlikely until 2024.
The Reserve Bank of Australia does expect the annual Consumer Price Index to rise temporarily to around three percent in the middle of this year as a result of the reversal of some pandemic-related price reductions.
However, underlying inflation was likely to remain below two percent over both 2021 and 2022.
April 28 will also see the Australian Bureau of Statistics released its first payroll jobs report since the JobKeeper wage subsidy finished in March.
The report states that Payroll jobs fell by 1.8 percent in the fortnight to April 10, 2021, compared with an increase of 0.2 percent in the previous fortnight, according to figures released by the Australian Bureau of Statistics.
Payroll jobs fell across all age groups in the fortnight to April 10, 2021, ranging from a 2.9 percent fall in jobs held by 15 to 19 year-olds to a 0.6 percent fall for 60 to 69 year-olds.
Treasury has estimated up to 150,000 jobs could have been lost as a result of the end of the program.
However, economists believe there are growing signs that the strength of the labor market could absorb these losses.
The unemployment rate fell to 5.6 percent in March.
Treasury in December had predicted it would be rising to 7.5 percent at this stage of the year.
(Edited by Vaibhav Vishwanath Pawar and Praveen Pramod Tewari.)
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