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MNI (Sydney)

Supply chain issues and demand for goods such as cars, furniture and clothing have pushed Australia’s inflation rate well into the Reserve Bank of Australia’s 2% to 3% target range and created an expectation of an outlook revision on prices at its first meeting for 2022 next week.

Trimmed mean inflation, the RBA’s preferred measure, surged by 50pps to 2.6% for the December quarter, while CPI inflation reached 3.5%.


Michelle Marquardt, head of Prices Statistics at the Australian Bureau of Statistics, told MNI that there was little in the way of temporary trends in the inflation data.

“What is out of cycle is how widespread the price rises were,” she said. “We saw price rises across almost all of the goods categories, rather than services, and this was a little bit unusual.”


Automotive fuel prices rose for the sixth consecutive quarter, resulting in the strongest annual rise since 1990, while high levels of building construction activity combined with shortages of materials and labour have contributed to two consecutive quarters with the largest rise in new dwelling prices since September 2000.

Non-discretionary inflation, which measures consumer essentials, jumped to 4.5% for the quarter largely due to increases in fuel prices.

The inflation data comes after last week’s labour force data showed unemployment at 4.2%, at around the level which the RBA believes is full employment, see: MNI INTERVIEW: Australia's Jobless Rate Challenges Dovish RBA.

The data is likely to put pressure on the RBA to revise its outlook for an interest rate cut, which the bank says is unlikely until late 2023 or 2024.


The RBA’s most recent Statement on Monetary Policy forecast trimmed mean inflation at 2.25% this year, with unemployment falling gradually through the year to 4.25%, see: MNI STATE OF PLAY: RBA Unfazed By Omicron Or Inflation.

The central bank is also due to decide on its bond buying program at next week’s meeting. The RBA has been buying AUD4billion of government bonds each week, and has said it will review the programme next week.

MNI Sydney Bureau | +61-405-322-399 |
MNI Sydney Bureau | +61-405-322-399 |

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