Australia’s CPI inflation declines to 3.4% YoY in November vs. 3.7% expected
Australia’s Consumer Price Index (CPI) climbed by 3.4% year-over-year (YoY) in November, following a 3.8% increase reported in the previous reading, the latest data published by the Australian Bureau of Statistics (ABS) showed on Wednesday.
The market consensus was for 3.7% growth in the reported period.
The RBA Trimmed Mean CPI for November rose 0.3% and 3.2% on a monthly and and annual basis, respectively. The monthly Consumer Price Index came in at 0% in November, compared to the previous reading of 0%.
AUD/USD reaction to Australia's Consumer Price Index data
The Australian Dollar (AUD) attracts some sellers following the inflation data from Australia. The AUD/USD pair is losing 0.19% on the day to trade at 0.6726, at the press time.
Australian Dollar Price Last 7 Days
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies last 7 days. Australian Dollar was the weakest against the British Pound.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.43% | -0.30% | 0.09% | 0.88% | -0.58% | 0.08% | 0.38% | |
| EUR | -0.43% | -0.73% | -0.35% | 0.45% | -1.01% | -0.35% | -0.04% | |
| GBP | 0.30% | 0.73% | 0.38% | 1.19% | -0.28% | 0.38% | 0.68% | |
| JPY | -0.09% | 0.35% | -0.38% | 0.82% | -0.67% | -0.03% | 0.30% | |
| CAD | -0.88% | -0.45% | -1.19% | -0.82% | -1.46% | -0.83% | -0.50% | |
| AUD | 0.58% | 1.01% | 0.28% | 0.67% | 1.46% | 0.66% | 0.97% | |
| NZD | -0.08% | 0.35% | -0.38% | 0.03% | 0.83% | -0.66% | 0.30% | |
| CHF | -0.38% | 0.04% | -0.68% | -0.30% | 0.50% | -0.97% | -0.30% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).
This section below was published at 21:00 GMT on Tuesday as a preview of the Australia’s CPI inflation report
- The Australian Consumer Price Index inflation is set to ease to 3.7% YoY in November.
- The Reserve Bank of Australia extended the rate-cut pause in December, signalling it was done with easing.
- The Australian Dollar is expected to face intense volatility on the inflation report.
The Australian Bureau of Statistics (ABS) will publish the Consumer Price Index (CPI) data for November at 00:30 GMT on Wednesday.
This is the second complete monthly CPI report, as the government continues to transition from the quarterly CPI to the monthly gauge as the primary measure of headline inflation.
“However, the RBA has said it still prefers the quarterly prints for a better gauge of inflation trends, given the new data can be volatile,” according to Reuters.
The inflation report is eagerly awaited to gauge the next interest rate move by the Reserve Bank of Australia (RBA), which could significantly impact the performance of the Australian Dollar (AUD).
What to expect from Australia’s inflation rate numbers?
Economists forecast Australia’s CPI to increase by 3.7% annually in November, after rising by 3.8% in October - the highest since June 2024 and above median forecasts of 3.6%. The RBA’s inflation target is in the range of 2%-3%.
In October, the CPI showed no growth on a monthly basis, while the Trimmed Mean CPI rose at an annual rate of 3.3% in the same period.
Improved business conditions, robust economic growth and hotter-than-expected inflation prompted the central bank to keep the Official Cash Rate (OCR) steady at 3.6% following its December monetary policy meeting.
Speaking at the post-policy meeting press conference in December, RBA Governor Michele Bullock noted that “inflation and jobs data will be important for board meeting in February,” adding that she “would not put timing on any future move, (it) will be meeting by meeting.”
Since then, the Australian labor market has shown signs of slowing, with the number of employed people dropping by 21,300 in November and Full-time Employment falling by 56,500 even as the Unemployment Rate remained at 4.3% in the reported month.
Against this backdrop, the Australian CPI data holds the key to determining whether the RBA could opt for a rate hike next month. “RBA cash rate futures imply nearly 50 basis points (bps) of rate increase in 2026,” according to analysts at BBH.
How could the Consumer Price Index report affect AUD/USD?
Heading into the Australian CPI inflation showdown, the AUD is sitting at its highest level in 15 months against the US Dollar (USD) near 0.6750. Expectations of monetary policy divergence between the RBA and the US Federal Reserve (Fed) remain an important catalyst underpinning the AUD/USD pair.
A surprise pick-up in Australia’s inflation could lift the odds for an interest rate hike by the RBA as early as next month, pushing AUD/USD further toward the 0.6800 level. On the other hand, a bigger-than-expected drop in the inflation figure could alleviate the pressure on the RBA for an imminent shift to tightening, which will likely fuel a correction in the Aussie.
Dhwani Mehta, Asian Session Lead Analyst at FXStreet, highlights key technical levels for trading AUD/USD following the CPI release.
“AUD/USD is holding its recent bullish momentum, with the 14-day Relative Strength Index (RSI) approaching the overbought territory, suggesting that there could be more room for upside before a pullback kicks in.”
“The Aussie pair could see a fresh leg north toward 0.6800 on acceptance above the 0.6750 psychological mark. The next relevant resistance levels are aligned at the October 3, 2024, high of 0.6888 and the September 2024 high of 0.6942. Conversely, any retracements could test the initial support at the 21-day Simple Moving Average (SMA) at 0.6671, below which a deeper correction will open toward the 0.6600 mark,” Dhwani adds.
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
Author
FXStreet Team
FXStreet
