Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
Q4 CPI came in below expectations and RBA forecasts with headline rising 0.6% q/q and easing to 4.1% y/y from 5.4%. The trimmed mean measure rose 0.8% q/ and moderated to 4.2% from 5.1%. Quarterly inflation rates slowed but favourable base effects also helped to bring annual inflation down. The moderation was driven by goods and tradeables though with services and non-tradeables both rising in line with Q3. The data is likely to mean that the RBA is on hold in February, dependent on revised staff projections, but maintains its tightening bias given the sticky nature of domestic price pressures.
Australia CPI y/y% approaches RBA's target band
Source: MNI - Market News/Refinitiv
- Rent assistance contributed to the quarterly easing in inflation as rents rose only 0.9% q/q after 2.2% in Q3 and would have been +2.2% without the measure. New dwelling construction rose 1.5% q/q, insurance +3.8% and tobacco +7% due to excise indexation.
- The moderation in inflation was driven by tradeables inflation falling 0.7% q/q, the lowest since Q2 2020. Whereas domestically-driven non-tradeables rose 1.3% q/q, in line with Q3, bringing the annual rate to 5.4% from 6.2% due to base effects. This series remains elevated.
- While goods prices rose only 0.4% q/q, services rose 1% q/q (Q3 1%) with core services up 1.1% down from 1.3% in Q3 (data is non-seasonally adjusted). Base effects brought annual inflation down to 4.6% y/y and 4.5% respectively from 5.8% and 6.2%. The quarterly rates are above the 2000-2019 averages and imply that services prices remain sticky.
Source: MNI - Market News/Refinitiv
- December inflation moderated to below 4% for the first time in 2 years. It came in at 3.4% helped by a 0.1% m/m drop and December 2022 rising 0.9% m/m. Base effects will be less favourable going foreward. Trimmed mean moderated to 4.1% from 4.8% y/y and ex volatile items & holiday travel to 4.2% from 4.8%. 6-month annualised rates for services and non-tradeables remain elevated at 8% and 10.1% respectively.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.