Australia annual 4Q16 CPI likely to rise 1.7 pct, remaining below RBA’s target since 3Q14

The Australian Bureau of Statistics is expected to release its consumer inflation (CPI) data for the last quarter of 2016 on Wednesday, January 25. The CPI is expected to have risen 0.7 percent in the 4Q16 for an annual rate of 1.7 percent.

This growth in inflation will be driven by the rise costs for petrol, tobacco and potatoes. Also, consumer inflation will continue to trend below the Reserve Bank of Australia's target band of 2-3 percent since September quarter of 2014.

“We look for a below-consensus +0.3 percent q/q for the headline and +0.2 percent q/q for underlying inflation in 4Q16, putting both at 1.2 percent y/y and 25 basis points below the RBA forecasts,“ said Morgan Stanley in its research note.

Underlying inflation, which strips out the effects of volatile price movements, is forecast to have been 0.5 percent in the quarter and 1.5 percent over the year. Both those annual forecasts sit below the central bank's two to three per cent target band. The annual inflation rate hasn't been within the RBA's target band since the September quarter of 2014, reported APP (Australian Associated Press).

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