The US saw its inflation remain stubbornly higher on Wednesday, and Australian employment figures are up ahead of Thursday’s session.
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Higher oil prices were seen filtering through the latest inflation reading for the United States. That will reignite inflation and economic downturn fears. Inflation in August rose for the first time since June 2022, to 3.7%.
Price growth still remains below the decades-high inflation rates of last summer, when the rate peaked at 9.1% in June. However, the latest increase in inflation still means the US economy is further from the Federal Reserve’s target rate of 2% and will probably make officials consider another rate hike this year.
The cause of the stubborn inflation reading was commodities, including gas and oil, which jumped 10.5% over the last month after Russia and Saudi Arabia continued aggressive cuts in supply. Core inflation, the price of goods and services minus the energy and food industries, decreased in August to 4.3%, down from 4.7% in July. However, it still remains well above the Federal Reserve’s target rate of 2%.
Some analysts fear Australia’s labour market has peaked with the unemployment rate hovering around historic lows, leaving little room for improvement.
Over the last year, Australia’s job reports have exceeded estimates on six occasions. However, when they increased on the upside, they were significant positive shocks. Australia’s economy gained 76,500 positions in May, more than five times estimates, while in March, it added 60,000 positions, tripling early estimates.
The Australian Reserve Bank watches employment figures closely, and a higher number would continue to raise fears of further interest rate increases.
The RBA left its cash rate on hold at 4.1%, the highest level since mid-2012, at the latest September board meeting last week.
“Inflation in Australia has passed its peak, and the monthly CPI indicator for July showed a further decline,” outgoing governor Philip Lowe said in an accompanying statement. “But inflation is still too high and will remain so for some time yet.”
