Australia’s inflation rate picked up in the first quarter of 2025, offering a modest lift to the Australian Dollar (AUD) on Wednesday. According to the Australian Bureau of Statistics (ABS), the Consumer Price Index (CPI) rose by 0.9% quarter-on-quarter (QoQ) in Q1, marking a significant acceleration from the 0.2% increase recorded in the final quarter of 2024. The figure also surpassed market expectations of a 0.8% rise.
On an annual basis, CPI inflation held steady at 2.4%—unchanged from the previous quarter but slightly above the anticipated 2.2%, signaling continued price pressures within the Reserve Bank of Australia’s (RBA) target band.
Core inflation, as measured by the RBA’s Trimmed Mean CPI, aligned with forecasts, rising 0.7% QoQ and 2.9% year-on-year (YoY) in Q1. These readings reflect underlying price stability, consistent with market projections.
Meanwhile, monthly CPI data for March showed no change in annual inflation, remaining at 2.4% YoY, the same as February’s reading.
The AUD responded positively to the stronger-than-expected data, with the AUD/USD pair gaining 0.30% on the day to trade at 0.6402 at the time of reporting. The inflation surprise has prompted investors to reassess the RBA’s monetary policy outlook, with markets now closely watching for signals on whether rate adjustments may be forthcoming in response to persistent inflationary trends.
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