The Australian CPI data for Q4 is due Wednesday (January 31) next week, WPAC taking note of the NZ data yesterday ...

From their detailed inflation preview, in summary (bolding mine):

  • the New Zealand CPI outcome has additional significance.
  • Weakness in tradeables inflation has been a recurring featureof the Australian inflation story through 2017, and the above New Zealand outcome signals this may again be the case in Q4.
  • Our forecast for the Australian headline CPI stands at 0.8%, 2.1%yr. The degree of risk to this figure from tradeables inflation is likely in the order of 0.2ppts - the average disappointment versus the market forecast in recent quarters.
  • Unlike New Zealand, rents and house purchase costs are losing momentum in Australia, resulting in a soft pulse for core or underlying inflation
  • We see the average of the RBA core measures at 0.5% in Q4, leaving the annual gain little changed at 2.0%yr


  • the take home point is simple. On both a headline and core basis, inflation will remain at the bottom of the RBA's target range for the foreseeable future. Further, based off the 2017 experience, the risks to this profile are to the downside