Australian CPI data for the first quarter of 2016

For the 'headline'result q/q: -0.2%

  • expected +0.2%

  • prior was +0.4%

For the y/y, 1.3%

  • expected is 1.7%, prior 1.7%

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For the'trimmed mean'

0.2% q/q:

  • expected 0.5%,

  • prior 0.6% q/q

1.7% y/y:

  • expected is 2.0%, prior 2.1%

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Weighted median' CPI:

  • 0.1% q/q: expected 0.5%, prior was 0.4%, revised from 0.5%

  • 1.4% y/y: expected 1.9%, prior was 1.9%

-

Much lower than expected for the inflation data, with the y/y trimmed mean now below the lower end of the RBA target band.

It's a bit of a shock to the market, the AUD has been marked lower on the data, just above 0.7700 as I update

The low core result (i.e. trimmed mean) will raise some concern at the RBA on low inflation

With inflation dipping so much it'll have to raise concerns that its an effective tightening in real interest rates. At the very least it'll give the market ammunition to boost expectations of RBA cuts ahead.

I do wonder if we'll get some questioning of the data. The blow out employment figures last year were met each and every time by 'the data is too good to be true' comments ... I wonder if this shock CPI result will be met with 'too bad to be true' comments?

Probably not. These things tend to be asymmetric.

more to come