Market & Economic update - August 2023

File: Economic & Market Update

Duration: 02:48

Date: August 10, 2023

00:01 Economic Review August 2023

00:03 As with last month, the Reserve Bank of Australia chose to pause on the 1st of August, extending the interest rate relief for borrowers.

00:09 The Bank stated that although “Inflation in Australia is declining but is still too high at 6 per cent”,

00:15 the “central forecast is for CPI inflation to continue to decline, to be around 3¼ per cent by the end of 2024 and to be back within the 2–3 per cent target range in late 2025.”

00:24 “Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe, but that will depend upon the data and the evolving assessment of risks.”

00:32 Looking globally the story continues on interest rates, with western governments lifting rates across the board.

00:39 The US currently targets a range of 5.25%-5.5%, UK is 5%, as is Canada and New Zealand is on the high side at 5.5%.

00:45 All these countries continue to see persistent services-based inflation, worryingly “sticky” overtime.

00:53 The Australian share market had a strong month, gaining 2.88% for the month, with a return of 11.67% for the year.

00:59 This was in line with global developed markets, which saw International Shares rise 2.11% for the month, contributing to an annual performance of 18.25%.

01:05 The strong sharemarket performance over the last 12 continues to benefit from the low 12 months ago and is generally led by a concentrated few technology stocks across global markets.

01:17 The monthly Consumer Price Index (CPI) indicator rose 6.0 per cent in the 12 months to June 2023, according to the latest data from the Australian Bureau of Statistics (ABS).

01:26 Michelle Marquardt, ABS head of prices statistics, said "CPI inflation slowed in the June quarter, with the quarterly rise being the lowest since September 2021.”

01:34 “While prices continued to rise for most goods and services, there were some offsetting price falls this quarter including for domestic holiday travel and accommodation and automotive fuel.”

01:46 The Australian Dollar fluctuated up and down for the month in a range of 3.9%, finishing the month up at 0.6718 USD, a monthly increase of 0.56 US cents

01:52 Consumer confidence improved slightly in July, moving from 74.1 to 78.4 points. However the index remains below 80 points, and at 22 weeks, continues the longest stretch at this level since the 1990-91 Recession.

02:00 Australia's seasonally adjusted unemployment rate stood at 3.5% in June 2023, unchanged from a downwardly revised figure in May, remaining close to last October's 50-year lows.

02:08 The participation rate edged down to 66.8% from May's record high of 66.9%.