MNI DATA PREVIEW: Australia Q1 Consumer Price Index Seen Lower

By Lachlan Colquhoun

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

of 2019 will be released by the Australian Bureau of Statistics Wednesday. Here

are five factors to note ahead of the release.

Expecting a slowdown. 

Inflation for the final quarter of 2018 was 1.8%, down from 1.9% in the previous

quarter. The market is expecting the slowdown to continue, with some analysts

anticipating a fall as low as an annualised 1.6% for Q1, with a quarterly

increase of only 0.3%.

Critical for RBA outlook. 

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 last week to 5.0% and

the inflation data will be closely watched as an indicator of RBA intentions.

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

Bank has gradually changed in outlook in the last six months and become more

dovish as the economy has slowed.

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 there is very little possibility it will return there

tomorrow.

Fuel prices lower.

Fuel prices rose sharply in October 2018 but fell hard in the last two months of

2018. For the final quarter of 2018, automotive fuel prices fell 2.5% after

rising 1.4% in Q3. Despite a recent uptick, fuel prices - along with falls in

prices for clothing and holidays - are expected to keep tomorrow's result low.

Smokers Hard Hit.

Government taxes sent tobacco prices soaring by a 9.4% for the last quarter of

2018, while the ongoing drought and seasonally availabilities continue to impact

on grocery prices, with the price of fruit increasing by 5%. It is a measure of

how anaemic inflation pressures are that the figure is buoyed by Government

taxation measures and natural disasters.

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

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