The Australian Bureau of Statistics (ABS) released data today, April 26, indicating that the Producer Price Index (PPI) surged to unprecedented levels in the first quarter of 2024, marking a significant uptick in inflationary pressures across producer spending.
According to the ABS report, the PPI, which tracks inflation from producer expenditure, soared by 4.3% annually in Q1/24, marking the highest level on record. This substantial increase follows a 4.1% rise recorded in the previous quarter, signaling a continued upward trajectory in inflationary trends.
Furthermore, the PPI index for Q1/24 registered the swiftest rate of increase since Q1/23. On a quarterly basis, the PPI index exhibited a notable uptick, surging by 0.9% in Q1/24.
The ABS attributed the surge in the PPI index to a notable escalation in producer prices within the real estate and building construction sectors, reflecting robust activity and increased costs within these industries.
This revelation comes on the heels of Wednesday’s report by the ABS, which unveiled that the Consumer Price Index (CPI), measuring inflation in consumer spending, rose by 3.6% year-on-year in the first quarter of 2024. Although this represented a deceleration from the 4.1% increase recorded in Q4/2023, it surpassed economists’ expectations of a 3.5% increase.
The better-than-expected performance of the CPI index has tempered market expectations regarding potential interest rate cuts by the Reserve Bank of Australia (RBA) this year. With inflationary pressures persisting and the PPI index hitting record highs, the likelihood of immediate monetary policy adjustments by the RBA appears diminished, providing some relief to market participants.