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ASX 200 shares lift as inflation hits highest level in 20 years

Over the three months to 30 June the CPI increased by 1.8%. That brings Australia’s annual inflation rate to 6.1%, up from 5.1%.
The post ASX 200 shares lift as inflation hits highest level in 20 years appeared first on The Motley Fool Australia. –

S&P/ASX 200 Index (ASX: XJO) shares broadly lifted off following the release of the latest Australian inflation figures.

The Australian Bureau of Statistics (ABS) released the June quarterly Consumer Price Index (CPI) figures at 11:30am AEST. CPI is a measure of household inflation.

In the first minutes following the release of the inflation data, ASX 200 shares gained 0.4%.

Here’s what the ABS reported.

What inflation numbers did the ABS report?

Over the three months to 30 June, the CPI increased by 1.8%. That brings Australia’s annual inflation rate to 6.1%, up from 5.1%.

According to the ABS, some of the biggest price increases were seen with new dwelling purchases by owner-occupiers, with prices rising 5.6% over the quarter.

The ABS attributed the sharp rise in new dwelling costs to “high levels of building construction activity combined with ongoing shortages of materials and labour”. It said a reduction in government construction grant payments compared to the March quarter also fuelled the big price increase.

Petrol and other vehicle fuels also added to the figure, increasing 4.2%, with June setting a new record high for the average unleaded fuel price down under.

Aussies looking to upgrade their home furnishings will also have felt the hip pocket pain. Furniture prices rose 7% over the three months, mainly due to increased transport and manufacturing costs.

Meanwhile, annual trimmed mean inflation, which excludes large price rises and falls, increased to 4.9%. That’s the highest level recorded since the ABS began publishing the series in 2003. Though judging by the bounce in ASX 200 shares, the market had largely priced this data in.

Unlike many nations, Australia currently only reports its inflation data quarterly. However, the ABS is working on plans for a new monthly CPI indicator.

ASX 200 shares and inflation

The unexpectedly sharp return of inflation in 2022 has seen the RBA, the US Fed and major central banks across the world begin to ratchet up interest rates for the first time in more than a decade.

This has hit equity markets across the world as the lengthy era of cheap money begins to reverse course.

ASX tech shares, often priced based on far future earnings, have been among the hardest hit, with S&P/ASX All Technology Index (ASX: XTX) down a painful 31% year-to-date.

Of course, not all ASX 200 shares have been impacted negatively by inflation.

Soaring energy costs have seen the S&P/ASX 200 Energy Index (ASX: XEJ) post a whopping 23% gain in 2022.

The post ASX 200 shares lift as inflation hits highest level in 20 years appeared first on The Motley Fool Australia.

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More reading

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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