The RBA target band for core inflation (data below following the headline results) is sustainably in a 2 to 3% band.

Headline 0.8% q/q

  • expected 0.8% q/q, prior 0.8%

For the y/y, 3.0%

  • expected 3.1, prior 3.8% (lower expected mainly due to base effects)

Core inflation:

Trimmed mean 0.7% q/q

  • expected 0.5% q/q, prior 0.5%

and 2.1% y/y

  • expected 1.8% y/y, prior 1.8%

Weighted median 0.7% q/q (another measure of core inflation)

  • expected 0.5% q/q, prior 0.5%

and 2.1% y/y

  • expected 1.9% y/y, prior was 1.7%

The core inflation measures are both higher than expected and both now within the RBA target band (the band is 2 to 3%, so at 2.1% just above the lower bound). The trimmed mean is at its highest since 2015.

The Australian dollar has been marked up a few points on the data result. Enough to shake out a few shorts. The higher inflation will add to market expectations that the RBA will be raising the cash rate before its promised 2024 at the earliest date. Short term Australian bond yeilds are up on the data in addition to the AUD.

It will likely take more than one reading on inflation like this to shift the RBA. But, hey, market response is market response. The RBA will point (again) to slow wage growth in arguing any jump in CPI is 'transitory'.