Australia Q4 CPI figures are due on Wednesday, 31 January

A quick preview of what to expect via Commonwealth Bank of Australia:

  • Expect CPI to rise by 0.7% in Q4 (2.0% rise y/y)
  • Higher petrol prices will add to the CPI
  • Tame inflation outlook supports a "no change" view by the RBA
  • Higher inflation likely by late 2018

Some comments by the CBA:

  • "The AUD has been a neutral influence on inflation, with the AUD Trade Weighted Index (TWI) about 3% lower over the past year"
  • "The main issues facing the RBA are an improving global and domestic activity outlook, firming labour markets, yet little sign of a pick-up in modest wages and inflation trends"
  • "We do not believe the RBA will lift the cash rate until the December quarter of this year"

You can check out the prior/Q3 readings here.

The headline figures may result in some initial reaction in the AUD if it is a hit/miss, but the devil is in the details. The one to look out for is the trimmed mean reading - which the RBA prefers - and that is expected to come in at +1.8% y/y, similar to Q3.

The RBA keeps a target band range for inflation between 2-3%, so a reading below that would mean that they are not likely to contemplate raising rates any time soon.

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