Inflation stays muted…no surprise for the RBA

Posted on April 24, 2018 by Pete Faulkner - Inflation, Uncategorized

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.