Data Snapshot: Consumer Prices - Groundhog Day

The key points in this report are:

 

  • The Reserve Bank (RBA) must feel like Bill Murray’s character, Phil, in the film Groundhog Day. Phil found himself reliving the same day over and over again when he went on location to the small town of Punxsutawney to film a report about their annual groundhog day.
  • Underlying inflation, using the trimmed mean measure, lifted by 0.4% in the September quarter, the same outcome as the past quarter and the same as every quarter for five of the past six quarters.
  • The annual rate of growth for underlying inflation also stayed steady in the September quarter at 1.6%. The underlying measure has remained below the RBA’s target band of 2-3% per annum for almost 4 years.
  • The headline measure of inflation rose 0.5% in the September quarter, taking the annual rate from 1.6% in the June quarter to 1.7% in the September quarter. This inflation measure confirms that price growth in the economy is soggy.
  • Some signs of price pressures in selected areas are evident in the breakdown of today’s data. Meat prices have increased due to the drought and some imported goods have seen inflation due to the lower Australian dollar. But these price pressures are limited and not enough to offset the muted and broader-based price pressures elsewhere in the economy.
  • The latest soft reading means that another rate cut appears locked in and the conversation has now turned towards unconventional monetary policy. We continue to expect the RBA to cut rates once more in February next year but cannot rule out a move in December.

 

Please see the attached report for more information.

 



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