23 Oct 2013
Australia's inflation picking up, above consensus
FXstreet.com (Barcelona) - The latest CPI readings in Australian for the third trimester of 2013 show inflation well contained, with the QoQ coming at 1.2% vs 0.8% expected, while the YoY print stood at 2.2% vs 2.1% expected. The trimmed mean CPI QoQ was 0.7% vs 0.6%, while the trimmed CPI YoY came at 2.3% vs 2.1% expected.
Sean Callow, FX Strategist at Westpac, earlier said: "The outcome would have to be some way from consensus (say 0.4 or 0.8 on core CPI) to have a substantial effect on RBA pricing given the RBA’s signal that another rate cut is not imminent." Since the results are showing some noticeable deviation from what was expected, suggesting inflation pressures picking up in the country, it may make it harder for the RBA to find a case to remain neutral/dovish.
Latest view by the RBA on price inflation
On the Statement on Monetary Policy from August 2013, the RBA said: "Consumer price inflation has been moderate this year, with tradables prices lower and some easing in the inflation rate for non-tradable goods and services in line with the slower growth of wages over recent quarters. In the June quarter, the rate of inflation picked up slightly from the low rate in March."
"There was a small pick-up in the prices of tradable items following significant declines over previous quarters. While the exchange rate has depreciated in recent months, for most tradable items historically it takes some time for this to be reflected in the prices facing consumers; a notable exception is the price of petrol, which has increased over the past few months and is likely to make a noticeable contribution to inflation in the September quarter."
"The various measures suggest that underlying inflation was a touch above ½ per cent in the June quarter. In year-ended terms, underlying inflation was a little under 2½ per cent. Year-ended rates of inflation continue to be affected by the introduction of the carbon price in July 2012. Abstracting from this effect, underlying inflation appears to be close to the lower end of the inflation target range."
Sean Callow, FX Strategist at Westpac, earlier said: "The outcome would have to be some way from consensus (say 0.4 or 0.8 on core CPI) to have a substantial effect on RBA pricing given the RBA’s signal that another rate cut is not imminent." Since the results are showing some noticeable deviation from what was expected, suggesting inflation pressures picking up in the country, it may make it harder for the RBA to find a case to remain neutral/dovish.
Latest view by the RBA on price inflation
On the Statement on Monetary Policy from August 2013, the RBA said: "Consumer price inflation has been moderate this year, with tradables prices lower and some easing in the inflation rate for non-tradable goods and services in line with the slower growth of wages over recent quarters. In the June quarter, the rate of inflation picked up slightly from the low rate in March."
"There was a small pick-up in the prices of tradable items following significant declines over previous quarters. While the exchange rate has depreciated in recent months, for most tradable items historically it takes some time for this to be reflected in the prices facing consumers; a notable exception is the price of petrol, which has increased over the past few months and is likely to make a noticeable contribution to inflation in the September quarter."
"The various measures suggest that underlying inflation was a touch above ½ per cent in the June quarter. In year-ended terms, underlying inflation was a little under 2½ per cent. Year-ended rates of inflation continue to be affected by the introduction of the carbon price in July 2012. Abstracting from this effect, underlying inflation appears to be close to the lower end of the inflation target range."