By James Glynn


SYDNEY--Consumer price pressures rose unexpectedly in April, sending a further warning to the Reserve Bank of Australia to remain vigilant, while affirming the central bank's decision earlier this month to put the possibility of a further interest-rate rise back on the table.

The monthly consumer-price index indicator rose 3.6% in the 12 months to April, compared with 3.5% in March, the Australian Bureau of Statistics said Wednesday. Economists had expected a fall to 3.4%.

"Inflation has been relatively stable over the past five months, although this is the second month in a row where annual inflation has had a small increase," said Michelle Marquardt, ABS head of prices statistics, in a statement.

The most significant contributors to the April annual rise were housing costs, food costs, alcohol and tobacco and transport, the data showed.

"This is the second straight month where inflation has moved in the wrong direction. Not yet a trend, but a worrying development nonetheless, " said Harry Murphy Cruise, Economist, Moody's Analytics.

Excluding these volatile items from the monthly indicator, the annual inflation rise in April was steady at 4.1%, the ABS said.

"In this context, today's print won't move the dial ahead of the RBA's board meeting on June 18," said Tony Sycamore, market analyst at IG Australia.

"However, it will raise questions about the pace and sustainability of inflation decline back towards the target in a timeframe that is consistent with the RBA board's strategy," he added.

In the wake of the monthly inflation data, money markets were pricing in just two basis points of rate cuts before the year-end.

Housing costs rose 4.9% in the 12 months to April, down from 5.2% in March. Rents increased 7.5% for the year, reflecting a tight rental market and low vacancy rates across the country, the data showed.

New dwelling prices rose 4.9% over the year, with builders passing higher costs for labor and materials onto the consumer. Annual price growth for new dwellings has been around 5% since August 2023, the ABS said.

Electricity prices rose 4.2% in the 12 months to April. The introduction of government energy rebates from July last year has mostly offset electricity price increases in that time, according to the ABS.

Excluding the rebates, electricity prices would have risen 13.9% in the 12 months to April, it added.


Write to James Glynn at james.glynn@wsj.com


(END) Dow Jones Newswires

05-28-24 2250ET