Consumer prices are likely to have risen in November according to the latest reading of the TD Securities-Melbourne Institute Monthly Inflation Gauge. The indicator has been a good forecaster of the inflation numbers that are critical in determining interest rate policy and the latest data shows an increase in inflation of 0.1% over the month and an annual rate to November last year of 1.8%.
Head of TD Securities Asia Pacific research, Annette Beacher said, “While we will finalise our official CPI forecasts in January along with our December Inflation Gauge report, at this stage we see annual headline inflation running at a low 1.5%, and underlying inflation easing to 2.0%, in line with the RBA November projection.” She expected the RBA to leave rates unchanged at the December RBA meeting but sounded a warning about 2016. “We are of the view that financial markets are not sufficiently pricing the risk that the RBA cuts in 2016, with the trigger being further downside disappointment in inflation.”
