Australia: Inflation nears target floor in May
Latest reading: Inflation dropped to 2.1% in May after having stood at 2.4% for a third consecutive month in April. The reading was the joint-lowest since March 2021, surprised markets on the downside and neared the lower-bound of the 2.0–3.0% target band of the Reserve Bank of Australia (RBA). Looking at the details of the release, food and housing costs rose at a softer pace in May, outweighing a weaker decline in transport prices.
As a result, the trend pointed down, with annual average inflation inching down to a near four-year low of 2.6% in May from 2.7% in April. Meanwhile, the annual rise in the trimmed mean—a closely watched measure of core inflation by the RBA—dipped to 2.4% in May (April: 2.8%), remaining within the Central Bank’s target band for the sixth consecutive month.
Lastly, consumer prices were flat month on month in May, contrasting with April’s 0.24% increase.