CPI data from Australia for the fourth quarter of 2019
Headline
0.7% q/q
- expected 0.6% q/q, prior 0.5%
1.8% y/y
- expected 1.7%, prior 1.7%
Core inflation:
Trimmed mean
0.4% q/q
- expected 0. 4% q/q, prior 0.4%
1.6% y/y
- expected 1.5% y/y, prior 1.6%
Weighted median
0.4% q/q
- expected 0.4% q/q, prior 0.3%
1.3% y/y
- expected 1.2% y/y, prior was 1.2%
CPI edging just a touch higher and still falling short of the lower bound of the RBA target band (2 to 3% for core over the course of a cycle). Still, the slight tick up will goive some encouragement to the RBA. The Bank is targeting a lower unemployment rate with the idea that more workers and more spending will drive inflation higher.
While the probability of a rate cut next week (the RBA meeting is Feb 4) fell sharply after the decline in the unemployment rate in last week's labour market data release this slight uptick in inflation probably nails the rate cut door shut.
Let me reiterate, CPI is still well under the RBA target band.The RBA has been missing on the target for 4 years now.
