Australian Q3 CPI likely to register 0.5 pct q/q, annual rate remaining at 1.6 pct: ANZ Research

Australia’s headline inflation for the third quarter of this year is expected to come in at 0.5 percent q/q in, with the annual rate remaining at 1.6 percent, according to the latest report from ANZ research. The largest contributor to the headline figure was holiday travel and accommodation.

Petrol prices are expected to detract from inflation this quarter, after rising sharply in the previous quarter. Trimmed mean inflation, the underlying measure of inflation focused on by the RBA, is expected to come in at 0.4 percent q/q.

This would see the annual rate stay at 1.6 percent. The risks to trimmed mean inflation for the quarter are seen to be as skewed to the downside slightly; forecast for trimmed mean inflation is in line with what the Reserve Bank of Australia (RBA) published in its August Statement of Monetary Policy (SOMP), the report added.

A number in line with this won’t put any pressure on the RBA to act sooner than currently expected. At this point, trimmed mean inflation would need to considerably disappoint markets to think the RBA will cut again in 2019.

"If the RBA eases in November, it is likely to be the result of a combination of the Fed easing in October and another weak month of retail’s sales suggesting that the tax cuts are not being spent rather than soft inflation," ANZ Research further commented in the report.