Australia: CPI undershoots again - Westpac

Justin Smirk, Research Analyst at Westpac, points out that Australia’s September Quarter CPI printed 0.4%qtr, compared to the market median and Westpac forecast for 0.5%.

Key Quotes

“With base effects the annual rate eased back to 1.9%yr from 2.1%yr in Q2. Inflation continues to bump along just at, or just under, the bottom of the RBA’s target band.”

“The average of the core measures, which are seasonally adjusted and exclude extreme moves, rose 0.3%qtr meeting our expectations. In the quarter, the trimmed mean gained 0.37% while the weighted median lifted 0.28%. The annual pace of the average of the core measures printed 1.7%yr, a further deceleration from 1.8%yr in Q2 2018 and 2.0% in Q1.”

“Incorporating revisions, the six month annualised growth in core inflation is only 1.5%yr which is well below the bottom of the RBA target band and the slowest pace since September 2016.”

“We now have had two consecutive years of forecasters over-estimating the quarterly CPI print. The average error since the December quarter 2016 is +0.14ppt.”