REPEAT:DATA ANALYSIS:Australia CPI Shows Inflation Still Muted

Repeats Story Initially Transmitted at 02:35 GMT Jul 25/22:35 EST Jul 24

By Sophia Rodrigues

     SYDNEY (MNI) - Australia's consumer price index inflation rose less than

expected in the second quarter, marking the seventh consecutive quarter where

the outcome fell short of expectations, but the year-on-year climbed into the

Reserve Bank of Australia's target band for the first time in five quarters.

     The data shows there is yet little sign of inflation pressures building in

the economy but doesn't have any immediate implication for the RBA's monetary

policy stance because Governor Philip Lowe has already stated he will remain

patient with inflation as long as the labor market is improving.

     Data published by the Australian Bureau of Statistics Wednesday showed

headline CPI rose 0.4% q/q, falling short of MNI median forecast for +0.5%.

Headline CPI y/y rose 2.1%, lower than the 2.2% rise forecast but entered the

RBA's 2% to 3% target band.

     The 2.1% y/y rise matched the increase last seen in Q1 of 2017 and was only

the second quarter in the last 12 when CPI rose above 2.0%.

     Underlying CPI - roughly taken as the average of trimmed mean and weighted

median measures of inflation -- rose in line with expectation at 1.9% y/y, but

slowed from 2.0% in Q1 (upwardly revised from +1.95%).

     In the latest quarter, the rise in inflation came from the transport group

due to 6.9% q/q rise in automotive fuel.  The other significant price rise was

tobacco which rose 2.8%.

     The clothing and footwear group rose 1.3% q/q to mark the first rise in

seven quarters. The increase was mainly due to a 2.2% rise in price for garments

for women as discounts were discontinued.

     In case of furnishings and household equipment, the pace of inflation

accelerated in Q2, rising 0.3% q/q after two quarters of decline.

     Inflation in the communication arena continued its decline, falling 1.3%

q/q to mark 16 straight quarters of fall. The y/y fall accelerated to 4.2%, the

biggest since Q1 of 2017.

     Housing CPI slowed in Q2, rising just 0.2% q/q, the slowest pace of

increase since Q4 of 2015.

     Non-tradable inflation rose 3.0% y/y in Q2, but slowed from a 3.1% rise the

quarter before. Tradable CPI rose 0.3% y/y after three straight quarters of

decline. 

--MNI Sydney Bureau; tel: +61 2-9716-5467; email: sophia.rodrigues@marketnews.com