May CPI slows to 4.0% year-on-year, below forecast
The May CPI in Australia slowed to 4.0% year-on-year, below the 4.3% forecast. This slowdown was driven by falls in certain categories.
The core inflation, however, rose to 3.6%, above estimates. This increase keeps the RBA August hike odds at around 36%.
The AUD had a flat response to the news, and three-year yields slipped by two basis points, indicating a modest hawkish tilt that does not decisively change the market outlook.
Labour force data due later this week will be crucial in determining the next steps for the RBA, with a soft unemployment print potentially pushing August hike odds back toward 50%.