Australia’s Inflation Cools to 13-Month Low in a Signal for Rate Pause in July

Australia’s consumer prices slowed to a 13-month low in May with the help of declining fuel prices.

Inflation in May rose 5.6% from a year earlier, according to the released data from the Australian Bureau of Statistics on Wednesday that beat the market forecast for a rise of 6.1%. This marked the slowest increase since April last year and down from 6.8% in April 2023.

Core inflation rose 6.1% from last year, its seven-month low and also at a slower pace compared to 6.7% in April. This could be a sign that the central bank might not have to raise rates again in July.

The market was quick to respond to the data as the Australian dollar fell 0.8% to $0.6632. The probability for a hike in July is now at 30% and the peak rate has been lowered to 4.35% instead of 4.6%.