23 Oct 2013
Flash: Australian inflation remains subdued - Westpac
FXstreet.com (Barcelona) - Despite the headline numbers, according to Westpac Economits, inflation in Australia remains subdued, as the pick up in prices was mainly due to seasonal, 'administered' and currency-related price gains.
Key Quotes
"Despite the headline number coming in above our expectation, the detail continues to show benign underlying conditions."
"More importantly, the RBA core measures were almost directly in line with both the Market and Westpac forecast. The weighted median measure rose 0.58%qtr and the trimmed mean was up 0.68%qtr given an average of 0.63%qtr."
"These are all very small increments though with the general picture still of underlying inflation tracking solidly in the lower half of the RBA's 2-3% target range."
"For us, the main upside surprises in Q3 were on housing and recreation, with a partial offset from a downside surprise on food prices. The main downside surprise was around food prices which rose just 0.2%qtr, up only a touch on Q2's +0.1%qtr and despite some strong rises in upstream costs."
"Overall, there is little of concern in the detail. The upside surprise in headline inflation looks to be mainly due to transitory influences - changes in administrative prices and currency related increases with 'demand driven' inflationary pressures still looking subdued. Rather than being a reflection of rising demand, these prices rises will tend to crimp demand especially given a weak labour market backdrop that means wage gains are unlikely to compensate for price gains."
Key Quotes
"Despite the headline number coming in above our expectation, the detail continues to show benign underlying conditions."
"More importantly, the RBA core measures were almost directly in line with both the Market and Westpac forecast. The weighted median measure rose 0.58%qtr and the trimmed mean was up 0.68%qtr given an average of 0.63%qtr."
"These are all very small increments though with the general picture still of underlying inflation tracking solidly in the lower half of the RBA's 2-3% target range."
"For us, the main upside surprises in Q3 were on housing and recreation, with a partial offset from a downside surprise on food prices. The main downside surprise was around food prices which rose just 0.2%qtr, up only a touch on Q2's +0.1%qtr and despite some strong rises in upstream costs."
"Overall, there is little of concern in the detail. The upside surprise in headline inflation looks to be mainly due to transitory influences - changes in administrative prices and currency related increases with 'demand driven' inflationary pressures still looking subdued. Rather than being a reflection of rising demand, these prices rises will tend to crimp demand especially given a weak labour market backdrop that means wage gains are unlikely to compensate for price gains."