CPI Update: Australia's Inflation Falls to 2.1%, Impacts on the AUD

Australia's annual inflation rate for September 2024 stands at 2.1%, down from 2.7% in August, indicating the lowest inflation increase since July 2021. This decline is largely due to significant decreases in electricity prices, which fell by 24.1%, and automotive fuel prices, which dropped by 14.0%. Despite these reductions, some price categories have seen notable increases: food prices rose by 3.3%, alcohol and tobacco by 6.3%, health costs by 4.8%, and education expenses by 6.4%.

Analysts forecast that inflation could slightly rise to around 2.3% by the end of the current quarter, a critical factor in guiding the Reserve Bank of Australia (RBA) on future monetary policy decisions, including interest rates.

Following the release of the Consumer Price Index (CPI) data, the Australian Dollar (AUD) experienced a decline of approximately 0.16% against the US dollar, partly because the inflation figure was below market expectations of 2.3%. The currency had already been under pressure due to mixed economic indicators and concerns about US-China trade relations. Although the AUD/USD pair tested support levels around 0.6467, it recovered after initially dropping to 0.6433. The AUD's decline reflects market reactions to economic conditions and expectations regarding the RBA's monetary policy.

Major levels to watch -

Resistance- 0.6510,0.6550

Support- 0.6430, 0.6360