The Consumer Price Index (CPI) data showed that Australian inflation remained steady on a yearly basis but it’s primarily focused on “goods” inflation rather than “services” inflation. However, the monthly inflation posted a decent increase, which left the Australian Dollar little changed.

The Australian Monthly Consumer Price Index (CPI) Data for January 2024

• January CPI year-on-year (y/y) inflation came in at +3.4%, slightly lower than the expected 3.6%. This is consistent with the December 2024 CPI figure of 3.4%.
• The trimmed mean (core) CPI year-on-year (y/y) for January stands at 3.8%, lower than the previous reading of 4.0%.
• The month-on-month (m/m) CPI for January showed an increase of 0.4%, compared to a decrease of -0.1% in the previous month.

The services inflation is of particular concern for the Reserve Bank of Australia (RBA) and many other developed market central banks, while the January inflation report doesn’t encompass all components of the CPI basket; the full picture will be provided by the more comprehensive Q1 report. However, the monthly CPI indicator offers a timelier indication of inflation using a portion of the data collected for the quarterly CPI.

This monthly reading typically includes updated prices for between around 66% of the weight of the Q1 inflation basket. Despite January’s year-on-year CPI figure remaining the same as December’s, the overall trend of downward drift in inflation in Australia appears to persist. Following the release of the CPI data, the Australian dollar initially dipped around 20 pips against the US dollar but then stabilized, with AUD/USD trading between moving averages still.

AUD/USD Live Chart