Prior to the release of the June quarter CPI, economists were expecting a 0.8% rise for the quarter and a 1.7% rise year on year. The underlying inflation figure, which strips out the more variable component of the measure, was expected to come in at 0.6% for the quarter and 2.2% for the year. The actual results were as follows:
June Qtr CPI: 0.7% (+0.2%)
Mar Qtr CPI revised up 0.1% to 0.7%
CPI to June year end: 1.5%
June Qtr u/lying CPI: +0.5% (Mar Qtr 0.7%)
U/lying CPI year to end of Jun: 2.3% (yr to end of Mar 2.4%)
Stephen Koukoulas said there is “nothing in the CPI to sway [the] RBA…it “reflects sub-trend growth and weak labour markets.”
Westpac said the headline rate was less than expected due to unexpected food price effects but the core inflation rate was expected. NAB’s David De Garis said, “Moderate inflation…would buy the RBA more time to leave…policy unchanged”. He expects rates to remain unchanged this year before rising next year.
ANZ said there was nothing to stop the RBA from cutting rates. “With sub-trend growth, low wages….low inflation and strong competitive pressure, the inflation outlook is not a constraint.
Shane Oliver: inflation is “benign” and not low enough to bring RBA cut. He still thinks rate cut odds are 50 /50.