An early preview of the Q4 Australian CPI data due next week, and what it might mean for the RBA

The Australian Bureau of Statistics publish the data at 0030GMT on Wednesday 27 January

  • The headline 'expected' is 0.3% q/q and 1.6% y/y
  • The Q3 result was 0.5% q/q and 1.5% y/y

The RBA most watch the 'trimmed mean' measure of inflation

  • expected is 0.5% q/q and 2.1% y/y
  • prior was 0.3% and 2.1%

Those 'expected' results are from the latest Bloomberg survey of economists.

Earlier this week we got NZ CPI data for Q4, it came in well below the 'expected'. I suspect the Australian CPI is going to do the same - the headline is expected at 0.3, I reckon its going to be closer to 0.1.

What will that mean for the RBA?

For the RBNZ, with inflation so low, well below target (0.1% y/y vs. 1-3% target), moves to cut rates further are closer than for the RBA, where inflation (the trimmed mean) is within the target band (2-3% for the Reserve Bank of Australia). A low reading on the CPI on Wednesday gives 'scope' to ease, but it doens't make it urgent I would think.

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As a side note, the National Australia Bank had planned to release their monthly business survey (which includes their much-watched business confidence and conditions indicators) on January 27, the same day as the CPI.

But ... they have said they'll release it on the 25th (Monday) instead. Thus not clashing with the Q4 CPI announcement.