SYDNEY, April 28 Reuters Australian consumer prices rose by much less than expected in the first quarter partly due to government subsidies for home building, while a very tame reading for core inflation suggested monetary policy would stay super loose for a long time to come.
The consumer price index rose 0.6 in the March quarter from the prior threemonth period, under market forecasts of a 0.9 gain. The annual pace picked up to 1.1, from 0.9, but again missed forecasts of 1.4.
That also remained far below the Reserve Bank of Australias RBA target band of 23.
A key measure of trimmed mean inflation rose a surprisingly low 0.3 in the quarter, while the annual pace, at 1.1, was the weakest on record.
The soft result reinforced views the Reserve Bank of Australia RBA will keep interest rates at a record low 0.1 for a long time to come and even extend its bondbuying programme later in the year.
The Australian dollar fell to a days low of 0.7726 following the soft result. It was last at 0.7737.
The RBA has reiterated rates will remain at 0.1 until actual inflation jumps to back within its 23 target band. Prices have been running below the floor of that band for five full years and are projected to keep missing until at least 2023.
The ABS said March quarter inflation was weak due to the introduction, continuation and conclusion of a number of government schemes and grants, resulting in price falls for new dwellings and tertiary education.
Without the offset from…