MNI 5 THINGS. Australia CPI Seen Lower, Below RBA Forecasts

--Aussie Quarterly CPI Data Released Wednesday January 30

By Lachlan Colquhoun

     SYDNEY (MNI) - Australian Consumer Price Index data for Q4 2018 will be

released Wednesday January 30 at 0030GMT, with Q/Q prices seen coming in below

the Reserve Bank of Australia's target mid-point.

     Here are five factors to look for in the Australian Bureau of Statistics

data release.

     Inflation seen at year on year 1.7%. Financial markets expect consumer

prices to have grown 0.4% in Q4, 2018, with an annualised and seasonally

adjusted inflation figure of 1.7%, down from 1.9% in Q3. Analysts have

overestimated the result for the previous eight quarters and this could increase

to nine consecutive misses if the figure comes in under 0.4% tomorrow.

     Under the RBA target range. The RBA's target range for inflation is between

2 and 3%, a range in which the bank has said that it would consider an interest

rate hike. Inflation was travelling at an annualised 2.1% in Q2, 2018, before

falling below the RBA's range in Q3. Despite this dip in inflation and slower

growth data at the end of 2018, the RBA has maintained its stance in the face of

market commentary suggesting that the Bank will be forced to cut, and not raise,

rates this year. Comments Tuesday from RBA Board member Ian Harper that strong

employment and a healthy Federal Budget outlook could prompt a rate rise suggest

the Bank is persisting in its view, even though CPI data is not expected to

conform to its script for the economy in 2019 and could even lead to a downward

growth forecast in the upcoming February Statement on Monetary Policy.

     Fuel Prices weigh on inflation. The price of fuel hit a 15 month low at the

end of the quarter and, after adding 1.4% to the Q3 result, is expected to be in

negative territory and weigh on the overall result. Changes in child care

funding arrangements were a major factor in the weak Q3 data, but that is not

expected to impact again.

     International holidays inflationary. The most significant price rise in Q3

was in international holiday travel and accommodation, up 4.3% for the quarter.

Given the December holiday period and a weaker Australian dollar, this category

can be expected to be a factor in holding up the inflation figure this time

around as well.

     Drought pushes prices higher. The price of food has been impacted by the

prolonged drought and has pushed grocery prices higher, up 0.5% in Q3. Alcohol

and tobacco were up by 1.3% for Q3 and by an annualised 6.8% and are also

expected to rise tomorrow, the latter due to increased Government excise.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

[TOPICS: MALDS$,MAUDR$,MAUDS$,MAUPR$,M$A$$$,M$L$$$,M$U$$$]