Australian Producer Price Index Unexpectedly Falls
January 25th, 2010 Posted in Aussie - Kiwi
The Australian Producer Price Index (PPI) declined unexpectedly, dropping 0.4% from the previous quarter, as opposed to a 0.1% rise expected by economists. The AUD’s recent gains are to blame for the decline as they eroded the costs of imported goods. However, as the global economy continues to improve and demand grows, prices are expected to return to growth in the coming quarters.
Australia’s Dollar (AUD) was mildly affected by the news release. Amid a slew of positive economic data releases in the past few weeks, confidence in the Australian economy persists, as do speculations regarding another imminent interest rate increase. Australia’s economy remained relatively robust during the global recession last year, boosted by consumer spending as the Australian government distributed more than A$20 billion to households as well as invested another A$22 billion on roads, railways and schools.
Australia’s jobless rate dropped in December to an 8-month low of 5.5% while consumer confidence rose this month by the most in 6 months as sentiment among households paying a mortgage jumped to the highest level since 1994. With the expectation of a rise in inflation in the 4th quarter, the fundamentals supporting an imminent rate hike, as well as a tightening of the monetary policy throughout 2010, remains strong.
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