MNI DATA IMPACT: Australia Consumer Price Index Stalls In Q1

By Lachlan Colquhoun

     SYDNEY (MNI) - Australian Consumer Price Index data for the first quarter

of 2019 was released on Wednesday. Here are five factors of interest in the

release by the Australian Bureau of Statistics.

Another big miss. 

Headline inflation was unmoved over the March quarter, delivering an annualised

headline figure of 1.3% against 1.8% for the final quarter of 2018. The market

was expecting a lower result than Q4, but the consensus was for an annualised

result of 1.6%. The closely watched trimmed mean edged 0.3% higher for the

quarter, compared with 0.4% in Q4.

Rate cut seen on the cards. 

Minutes from the April board meeting of the Reserve Bank of Australia spelt out

the conditions in which the Bank would consider a rate cut: higher unemployment

and lower inflation. Unemployment ticked 0.1 points higher in March to 5.0%, not

alone enough to change RBA thinking, but today's inflation numbers could be the

catalyst for an interest rate cut when the Bank next meets on May 7. Official

rates have been held at a record low 1.5% since November 2016 and the Bank has

gradually changed its outlook, becoming more dovish as the economy slows.

Under the RBA target range. 

The RBA target range for inflation, and the range in which it might consider a

rate rise, is between 2 and 3%. It has been three years since inflation was

within the RBA target and the headline number continues to fall.

Fuel prices lower 

Falling fuel prices continue to weigh on inflation, with prices down 8.7% for

the quarter after a 2.5% fall in Q4. Also lower were domestic holidays, travel

and accommodation -- down 3.8% -- and international holidays (-2.1%).

Drought impact. 

The ongoing drought in regional Australia continues to drive higher food prices,

with the price of vegetables up 7.7% for the quarter.

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

--MNI Sydney Bureau; +61 405322399; email: lachlan.colquhoun.ext@marketnews.com