- The Australian monthly consumer price index is expected to be 2.3% in March.
- Quarterly IPC inflation is expected to decrease even more below 3%, with underlying figures that meet the objective of the RBA.
- The Australian Reserve Bank will meet in mid -May to decide on monetary policy.
- The Australian dollar weakens in front of its American rival after reaching a new maximum in 2025.
Australia will publish multiple inflation figures on Wednesday and financial markets anticipate that price pressures decrease even more to early 2025, racing the way for additional cuts of interest rates by the Bank of the Australian Reserve (RBA). The Central Bank is expected to meet to decide on monetary policy from May 19 to 20.
Returning to the data, the Australian Statistics Office (ABS) will publish two different inflation indicators: the quarterly consumption price index (CPI) for the first quarter of 2025 and the monthly IPC of March, which measures annual price pressures during the last twelve months. The quarterly report includes the middle IPC trimmed from the RBA, the favorite inflation indicator of policy formulators.
The RBA has maintained the official cash (OCR) rate at 4.10% when it met at the beginning of April, after delivering a cut of 25 basic points (PBS) in February, the first after the cycle of increases that began in 2022.
What to expect from the figures of the Australian inflation rate?
The ABS is expected to report that the monthly CPI increased by 2.3% in the year until March, decreasing from 2.4% registered in February. The quarterly IPC is expected to increase 0.8% intertrimestral (qoq) and 2.2% year -on -year (yoy) in the first quarter of 2025. In addition, the preferred indicator of the Central Bank, the middle CPI trimmed of the RBA, increases a 2.9% interannual in the fourth quarter, decreasing from the advance of 3.2% registered in the previous quarter.
Finally, it is forecast that the middle IPC trimmed from the RBA increases 0.7% intertrmetral, greater than 0.5% recorded above. Even so, the figures will be maintained within the objective of the RBA to maintain inflation between 2% and 3%, which means that the Central Bank could make additional cuts of interest rates in the foreseeable future.
Meanwhile, economic activity in the country, measured by the Gross Domestic Product (GDP), recovered modestly in the last quarter of 2025, with a GDP growth of 0.6% in real terms, exceeding market expectations of 0.5% and marking the best performance since December 2022. The annual growth rate of 1.3% also exceeded the forecast of the consensus of 1.2%. The modest advance scared the ghost of the recession, although the economy is not yet out of danger.
Finally, it is worth adding that it is projected that Australian GDP growth reaches approximately 2.2% in 2025, according to the most recent forecasts of the RBA. Beyond the inflation objective of the central banks, warm growth has been part of the decision of policy formulators to cut interest rates, to help avoid a more pronounced economic setback.
Meanwhile, the president of the United States (USA), Donald Trump, initiated a global commercial war. After announcing tariffs to neighboring countries, Trump launched “reciprocal tariffs” to most commercial partners. Australia fell under the base tax of 10% while facing a 25% tariff in all exports of steel and aluminum towards the USA. However, most tensions are between China and the US, with tariffs in hundreds. China is the main commercial partner of Australia, and the local economy can suffer the echoes of tensions between the two greatest economies in the world.
In addition, concerns related to the impact of the commercial war on the US economy keep the US dollar (USD) in a weak position. The USD fell to new minimums of 2025 compared to most of its main rivals in April and maintains its soft tone regardless of the feeling of the market.
The Governor of the RBA, Michelle Bullock, said: “If there are great tariffs on China, Chinese trade will probably try to find other ways to find a market. Australia could even benefit from that. So we could, in fact, find some deflationary impacts for Australia if it develops in that way.”
How could the Aud/USD consumer price index affect the consumer index?
Inflation figures are, as always, crucial. The decrease in inflationary pressures should feed bets on a RBA rates cut in May.
In general terms, higher IPC figures would be bulls for the AU in the midst of expectations of a more aggressive RBA. However, the opposite scenario is also valid: the decrease in inflation could push policy formulators towards a more moderate position.
In the face of the publication of the CPI, the AUD/USD torque is negotiated around the 0.6400 brand, retreating a new annual maximum of 0.6450.
Valeria Bednarik, chief analyst of FXSTERET, says: “The aud/USD is consolidating profits and, despite the intra -field, the upward case remains firm. The technical readings in the daily graph far.”
Bednarik adds: “The aud/USD torque should find an initial short -term support in the 0.6340 region, with additional falls exposing the price zone of 0.6280, where a simple mobile average (SMA) of 20 Alcista converges with a SMA of 100 flat. Annual should result in the AUD/USD testing the determination of the sellers around the figure of 0.6500. “
FAQS inflation
Inflation measures the rise in prices of a representative basket of goods and services. General inflation is often expressed as an intermennsual and interannual percentage variation. The underlying inflation excludes more volatile elements, such as food and fuel, which can fluctuate due to geopolitical and seasonal factors. The underlying inflation is the figure on which economists focus and is the objective level of central banks, which have the mandate of maintaining inflation at a manageable level, usually around 2%.
The consumer price index (CPI) measures the variation in the prices of a basket of goods and services over a period of time. It is usually expressed as an intermennsual and interannual variation. The underlying IPC is the objective of the central banks, since it excludes the volatility of food and fuels. When the underlying IPC exceeds 2%, interest rates usually rise, and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually translates into a stronger currency. The opposite occurs when inflation falls.
Although it may seem contrary to intuition, high inflation in a country highlights the value of its currency and vice versa in the case of lower inflation. This is because the Central Bank will normally raise interest rates to combat the greatest inflation, which attracts more world capital tickets of investors looking for a lucrative place to park their money.
Formerly, gold was the asset that investors resorted to high inflation because it preserved their value, and although investors often continue to buy gold due to their refuge properties in times of extreme agitation in the markets, this is not the case most of the time. This is because when inflation is high, central banks upload interest rates to combat it. Higher interest rates are negative for gold because they increase the opportunity cost to keep gold in front of an asset that earns interest or place money in a cash deposit account. On the contrary, lower inflation tends to be positive for gold, since it reduces interest rates, making bright metal a more viable investment alternative.
Economic indicator
Consumer Price Index (MOM)
The consumer price index published by the Bank of the Australian Reserve (RBA) and reissued by the Australian Statistics Office It is a measure of the evolution of prices by comparing retail prices of a basket of representative purchase of goods and services. The purchasing power of the AU is dragged by inflation. The CPI is a key indicator to measure inflation and changes in purchase trends. A high reading is considered positive (or bullish) for the AUD, while a low reading is considered negative (or bassist).
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Next publication:
LIE ABR 30, 2025 01:30
Frequency:
Monthly
Dear:
–
Previous:
2.4%
Fountain:
Australian Bureau of Statistics
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
