2021.07.2805:50:00UTC+00Australia Inflation Accelerates In Q2

Australia's consumer price inflation accelerated in the second quarter largely due to the low base effects, data from the Australian Bureau of Statistics showed on Wednesday.

Annual inflation increased to 3.8 percent in the June quarter from 1.1 percent in the March quarter. The rate came in line with economists' expectations and was the fastest rate in almost 13 years.

The acceleration in annual inflation was largely driven by the 'base effects' following the introduction of free child care and a record fall in fuel prices in the June 2020 quarter.

"In situations such as this, it is useful to consider underlying inflation measures such as the trimmed mean, which are designed to remove large, one-off price impacts," Head of Prices Statistics at the ABS, Michelle Marquardt said.

The trimmed mean inflation was 1.6 percent annually, in line with expectations, versus 1.1 percent in the March quarter. On a quarterly basis, the trimmed mean consumer prices gained rose 0.5 percent.

Consumer prices advanced 0.8 percent sequentially in the second quarter, faster than the 0.6 percent increase in the first quarter and also above economists' forecast of 0.7 percent.

Most of the surge in inflation in the second quarter was driven by base effects that will unwind over the next couple of quarters, but inflation is likely to remain stronger than the central bank is anticipating, Marcel Thieliant, an economist at Capital Economics, said.