Inflation stays muted…no surprise for the RBA

The first quarter of 2018 has seen price inflation remain very muted, and outside of the RBA’s inflation target range.

The headline CPI data showed a 0.4% q/q increase for +1.9% y/y. This was broadly in line with, or at the bottom end of, market expectations. The RBA preferred “core” measures (trimmed mean and weighted median) showed a slightly firmer picture at +0.5% q/q and +1.95% y/y. This is very much inline with what the RBA have been expecting and is therefore extremely unlikely to be considered as a trigger for a move either way in the Cash Rate, which currently sits at 1.5%.

As has been the case for some time, it is Tradables inflation that is keeping the lid on prices with the “international” side of the price equation showing a third consecutive quarter of negative readings down 0.5% y/y while the “domestic”, non-Tradables, data shows prices running at +3.1% y.y.

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