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Here's a quick chart of Australian core CPI, including forecasts for Q3 in green

David Scutt

Scutt Partners

Here's a quick chart of Australian core CPI, including forecasts for Q3 in green. Markets are looking for a quarterly rate of 0.5%, something which will be the lowest level since Q1 2013 if realised, with the annual rate expected to fall back to 2.65% from 2.8% in Q2. With weak wages growth and soft labour market conditions apparent, all eyes should be on the breakdown between tradable and non-tradable inflation. Given the RBA believe soft labour market conditions will stymie non-tradable (domestic) inflation in the period ahead, something they believe will keep inflation within their target band despite recent weakness in the Australian Dollar, it will be very disconcerting to see this figure remain at elevated levels. If indeed this does eventuate, it'll provide less manoeuvrability for the RBA on rates should the decline in the AUD continue. (VIEW LINK)

David Scutt
David Scutt
Independent Market Strategist
Scutt Partners

David is a Director of Scutt Partners Pty Ltd and has successfully worked in the financial services markets over the past 12 years with both large and smaller banking groups. He has provided strategic financial analysis for currency and interest...


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