A weaker than expected result for inflation has raised speculation the Reserve Bank will cut the official interest rate when it meets in two weeks.
According to the latest figures from the Australian Bureau of Statistics, the consumer price index rose by just 0.2% in the December quarter, with the inflation rate now at 2.2% for the year.
Underlying inflation was 0.6% for the quarter, the ABS revealed. Economists had expected to see an average rise of 0.4% rise for the quarter, with an annual inflation rate of 2.4%.
CommSec economist Craig James said in a statement the recent improvement in the global economic outlook, rising share markets and strong house prices should help the RBA keep rates on hold – but said the inflation data gives the board room to move.
“In addition recent commentary from the Reserve Bank has highlighted that interest rates are already below “normal” levels, and the central bank is unlikely to want rates to get too far from normal unless conditions take a drastic turn for the worse.”
Shares rise after modest offshore lead
The sharemarket has increased this morning after a modest offshore lead, with a good lead from the United States where Wall Street increased on solid earnings reports.
The benchmark S&P/ASX200 index was up 14 points or 0.3% to 4,793.7, while in the United States the Dow Jones Industrial Average rose 62.4 points or 0.5% to 13,712.1.
Nufarm shares fall on weaker profit warning
Nufarm shares have fallen 7.58% to $5.85 this morning after the company warned its weaker than expected trading conditions will impact first-half profit.
In a statement, the company said it now expects its half year results for the Australia and New Zealand division to be down from last year.
The company said business in the summer cropping regions of New South Wales and Queensland had been hit by hot and dry conditions.
“This has impacted in a number of market segments, including relatively high value segments such as cotton, horticulture and other summer crops,” the company said.