A slight increase in the Consumer Price Index last month, to 3.6% from 3.5% in March, has led some economists to predict we’ll be waiting longer for the first official interest rate cuts, perhaps until the end of next year, with little to no chance of a rate rise in the meantime. While inflation has been relatively stable over the past five months, this is the second monthly increase in a row. The biggest price increases were in the housing, food and beverages, alcohol and tobacco, and transport sectors. Retail spending continues to be weak. The 0.1% increase in turnover in April wasn’t enough to make up for a 0.4% drop in March.
The higher-than-expected inflation figures saw Australian share prices take a tumble after reaching a welcome high mid-month. The ASX200 finished the month on a positive note, slightly higher for the month of May. In the US, troubles in the tech sector and a global bond sell-off saw small losses on the Dow, the Nasdaq and the S&P 500 while European markets in London, France and Germany also finished the month on a low.
A strong US dollar along with the uptick in Australia’s inflation data saw the Aussie dollar fall from a mid-month peak of just over US67 cents.
