Wednesday morning in Australia (22 October 2014 at 0030GMT) we get Q3 CPI data out from Australia.

Unlike most other developed nations, we only get the CPI quarterly here in Australia, so its something of a big deal data point!

The ‘headline’ result is the q/q CPI for Q3:

  • expected is +0.4%,
  • prior was +0.5%

For the y/y, expected is 2.3%, prior 3.0%

For the ‘trimmed mean’ (which is the measure the RBA pays most heed to): it is the ‘core’ inflation figure where the RBA target band is 2 -3%.

For the q/q:

  • expected 0.5%,
  • prior 0.8%

For the y/y:

  • expected is 2.7%, prior 2.9%

Finally, there is the ‘weighted median’ CPI:

  • For q/q: expected is 0.5%, prior was 0.6%
  • For y/y: expected is 2.6%, prior was 2.7%

Check out the headline expected, the consensus is at +0.4%. But, NAB disagrees, their economists are tipping the CPI to come in flat (at 0.0% change q/q):

  • They cite lower petrol prices, lower fruit and vegetable prices, plus the scrapping the carbon tax

Westpac (senior economist Justin Smirk):

  • The repeal of the carbon tax in July and falling commodity prices helped keep a lid on inflation in the September quarter
  • ” … a meaningful impact … via its direct impact on power and utilities bills”
  • “Other key factors for the low CPI print are: falling crude oil prices which has resulted in auto fuel prices falling”
  • Offsetting are the rise in housing prices, food and health costs
  • Westpac is forecasting a +0.6% q/q rise (& 2.4% y/y) in the headline CPI
  • And for the “core” (which are seasonally adjusted): +0.5% q/q and +2.5% y/y

Commonwealth Bank chief economist Michael Blythe:

  • Doubts the carbon tax repeal will have much of an impact on the inflation figures
  • “Information from credit card data collections show that the average size of a utility bill rose in the third quarter rather than fell and business anecdotes suggest a reluctance to pass on claimed price benefits and other offsets are at work, for example higher gas prices”
  • & The falling Australian dollar is putting upward pressure on inflation through rising import prices
  • “The strength of the housing market will keep some pressure on housing-related CPI items outside of utilities”

TD Securities (they have their own monthly inflation measure which tries to duplicate the Australian Bureau of Statistics measure)

  • are tipping +0.4% q/q

Bank of America-Merrill Lynch chief economist Saul Eslake:

  • Expects inflation to continue to decelerate for the remainder of 2014
  • “A combination of domestic economic weakness and changes in policy”

The lower that inflation comes in, the more likely the RBA will hold rates steady for longer (as they indicated in the Minutes today). The RBA noted again today:

  • a “period of stability in interest rates”

And also:

  • “Wage growth was expected to remain relatively slow in the near term, which should help to maintain inflation consistent with the target even with lower levels of the exchange rate”