Australia’s underlying inflation came in above expectations in the September quarter, adding pressure on the Reserve Bank of Australia ahead of its November meeting. The trimmed mean CPI rose 1.0 percent quarter on quarter and 3.7 percent year on year, against forecasts of 3.6 percent. Headline CPI rose 1.3 percent over the quarter.
Monthly figures pointed the same way. September CPI rose 0.8 percent month on month and 4.3 percent year on year, against expectations of 0.7 percent and 4.2 percent. The trimmed mean rose 0.3 percent in the month, in line with forecasts, and its annual rate was 3.6 percent.
Energy drove the headline beat
The trimmed mean strips out the largest price rises and falls, which is why the Reserve Bank uses it as its main gauge of underlying inflation.
Weighted median CPI rose 1.0 percent in the quarter, slightly below the 1.1 percent forecast, and was up 3.6 percent on a year earlier.
Bullock signals a tighter labour market
RBA Governor Michele Bullock told a Senate committee that inflation was likely to run higher than the central bank’s August base case. She said the re-escalating Middle East conflict had pushed energy prices well above earlier assumptions. The labour market also appeared a little tighter than previously judged.
The central question for the Board is whether 100 basis points of tightening delivered so far this year will be enough to return inflation to target in a reasonable time. The Board meets on November 2 and 3, when it will publish updated forecasts with its decision.
Related: UK shop price inflation jumps to 2.1% ahead of budget · Japan core inflation Hits 2.1% in September, above forecasts
Data: FRED — St. Louis Fed · Swissquote
