Australia: Headline CPI to lift by 0.6%/q - TDS

Analysts at TD Securities expect Australia’s 'top down' headline CPI to lift by +0.6%/q and by 2.1%/y, after the monthly headline inflation rose modestly in the Sept quarter, +0.4%/q average and +0.3%/q mid-month.

Key Quotes

“We also arrive at +0.6%/q in a 'bottom up' sense. While fuel prices have recently exploded (late Sept/early Oct), a dip earlier in the quarter sees Q3 fuel prices rise by +0.9%/q (although early tracking for Q4 is +7.6%/ q).”

“We look for the Q3 trimmed mean to increase by +0.4%/q (+0.35%/q in unrounded terms, Inflation Gauge +0.3%/q) leaving the annual pace all but unchanged at 1.86%/yr, and combined with a similar +0.4%/q lift in the weighted median measure (also 1.86%/y) we see overall annual underlying inflation trekking sideways at 1.86%/yr (rounding to 1.9%/y, same as the prior quarter).”

“TD is more bullish for headline CPI compared with consensus. Median may be +0.5%/q but the mode is +0.4%/q, so analysts are tilted towards a dovish outcome. In contrast, TD and analyst forecasts for the core measures are clustered around +0.4%/q, even if the range is +0.3% to +0.6%/q.”