MNI BRIEF: Aussie PPI Eases; Export Prices Fall

A deceleration in the Q4 Producer Price Index provided the Reserve Bank of Australia with a modicum of good news after Wednesday's stronger-than-expected Q4 Consumer Price Index firmed the odds of another 25bp hike. PPI rose 0.7% q/q, down from 1.9% in Q3, and the annual pace fell to 5.8% from 6.4%, according to the Australian Bureau of Statistics. The main contributors to the increase were building construction, heavy and civil engineering construction, and computer and electronic equipment manufacturing.

The Reserve Bank of Australia is expected to tighten monetary policy by a further 25bps at its February 7 meeting after the Q4 Consumer Price Index printed hotter than expected, prompting traders to nearly fully price in a 25bp hike. While falling shy of the RBA's forecast for an 8% y/y rise, the 1.9% q/q and 7.8% y/y pace exceeded consensus forecasts for 1.6% q/q and 7.6% y/y. It was the highest annual CPI print since 1990.

Meanwhile, the decline in global energy prices steered the Export Price Index down 0.3% in Q4, driven by coal, iron ore and petroleum. Across the year, the EPI rose 20.5%. The Import Price Index rose 1.8% q/q, or 14.9% y/y.