Australian inflation lifted by fuel, tobacco & the drought – Westpac

According to Justin Smirk, Senior Economists at Westpac offered his take on Wednesday's release of the Australian consumer inflation figures, which came in to show a rise of 1.8% YoY.

Key Quotes:

“As expected the main sources of rise in the CPI were tobacco (8.4%/0.29ppt contribution), auto fuel (4.4%/0.14ppt) and the drought impact on food (1.3%/0.20). Combined these groups accounted for 0.63ppt of the 0.63% rise in the CPI.”

“The trimmed mean which, is seasonally adjusted and exclude extreme moves, rose 0.43%qtr which was on par with the market expectations. The annual pace was flat at 1.6%yr, the third consecutive quarter of this pace. The weighted median lifted 0.36%qtr/1.3%yr.”

“Incorporating revisions, the six month annualised growth in the trimmed mean was flat at 1.7%yr, below the bottom of the RBA target band. Our forecasts have the six month annualised pace of core inflation only just touching 2%yr just once in the four quarters of 2020.”