TD Securities/Melbourne Institute (MI) Inflation Gauge for May: +0.3% m/m and +1.4% y/y

  • prior was +0.3% m/m and +1.4% y/y (the trimmed mean was also +1.4% y/y

Trimmed mean

  • +0.3% m/m and +1.3% y/y

Annette Beacher, Chief Asia-Pac Macro Strategist at TD Securities:

  • Using mid-quarter prices, our June quarter headline inflation measure rose by 1.0 per cent, while our trimmed mean measure rose by 0.6 per cent.
  • While these are solid price increases, they are weaker than that observed a year ago, hence why annual rates remain benign.
  • While we will finalise our June quarter CPI forecasts with our June Inflation Gauge report, at this stage we see annual underlying inflation easing in to the bottom half of the RBA's two to three per cent target range
  • The RBA has expressed some doubt about the reliability of the capital expenditure survey, however, the persistent weakness in 2015 - 16 services investment plans cannot be dismissed, and low inflation is no impediment to further easing should that be required
  • We expect this tone and explicit easing bias to be voiced at tomorrow ' s RBA Board meeting, along with leaving the cash rate at 2 per cent