Australia Melbourne Institute Sept Inflation Expectations Fall

--Expectations on Pay Growth at 1.7% for Second Consecutive Quarterly Survey

     SYDNEY (MNI) - From the Melbourne Institute Consumer Inflationary

Expectations survey for September published Thursday.

                                    September     August

--------------------------------------------------------

                                    %, Annual  %, Annual

Expected Inflation (trimmed mean)        +3.8       +4.2

Expected Inflation (weighted mean)       +2.2       +2.5

     FACTORS: Annual inflation expectations fell in September with the trimmed

mean dropping to its lowest in three months. Expectations on a weighted-mean

basis fell to their lowest this year and are now close to the bottom of the

Reserve Bank of Australia's 2%-to-3% target band.

     Total pay growth in the 12 months to September rose to 1.4% from 1.3% in

June. Pay expectations for the coming 12 months were unchanged at 1.7% for the

second consecutive quarterly survey -- but this was below 2.1% reported in the

September 2016 survey.

     TAKEAWAY: It is unclear what has driven the second consecutive drop in

inflation expectations. It may likely be the continued effect of a slowing in

second-quarter headline consumer price index inflation -- as seen in data

published by the Australian Bureau of Statistics in late July. The fall may also

be a reflection of household worries about economic conditions as seen in

consumer confidence surveys.

     The data on pay growth is concerning given consumers don't appear to be

positive about earnings despite strong growth in employment this year.

--MNI Sydney Bureau; tel: +61 2-9716-5467; email: sophia.rodrigues@marketnews.com

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