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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.
AUSTRALIA
Looking at the breakdown of the Australian Q2 CPI shows that 10 out of the 11 major sub-indices recorded rises in Q2. This was the same as Q1 and Q4 from last year. However, the number of sub-indices that recorded faster quarterly changes compared to Q1 was down to 4 out of 11. This compares with 7 out of 11 for the previous 2 quarters, see the first chart below.
Fig 1: Australian CPI Momentum
Source: MNI/Market News/Bloomberg
- Looking at momentum on a YoY basis, 10 out of 11 of the sub-indices were positive in YoY terms, a fresh high for this upturn in inflation.
- However, it's interesting to note the proportion of sub-indices recording YoY gains above 2.5% (the mid-point of the RBA's inflation target) fell back slightly to 7 out of 11 from 8 out of 11 in the previous quarter, see the second chart below.
- Of course, inflation pressures can still pick up further from here, particularly if we see underlying wage gains build further momentum. Actual inflation is also still very strong, given the RBA's preferred core measure is highest on record at just under 5% yoy, while the ABS noted goods inflation is at the strongest pace since the late 1980s.
- Still, the RBA may take some comfort from today's print around the need to get even more aggressive than it already has in terms of the pace of rate hikes (i.e. needing to move beyond the 50bps rate hike pace).
Fig 2: Proportion of Major Australian CPI Sub-Indices Running Above 2.5% YoY Pace
Source: MNI/Market News/Bloomberg
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.
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