The main index for inflation data known as the consumer price index (CPI) from the Australian Bureau of Statistics (ABS) increased by 0.20 per cent in the March quarter. The annual rate came in at 1.3 per cent. The annual rate for the year through the December quarter was 1.7 per cent. Inflation came in slightly above the June 2012 low of 1.2 per cent and below the RBA’s target of 2 to 3 per cent. However, data from the ABS indicates that Trimmed Mean CPI (QoQ), which strips out the effect of volatile price movements, increased to 0.60 per cent in the March quarter, adjusting the annual rate to 2.35 per cent. Analysts from Citi cited the chance of an interest rate cut in May falling from 64 per cent to 52 per cent. However, the analysts are still expecting an interest rate cut by June.
Economists from the National Australia Bank said the 0.60 Trimmed Mean CPI (QoQ)(Q1) was in line with the RBA’s 2.25 inflation forecast. NAB senior economist David de Garis said that inflation numbers were low although still in line with expectations. “I don’t think its going to take the RBA’s easing bias away, there’s still a chance they will cut in May,” he said. “It doesn’t suggest there’s any undue economic softness, so it does reduce the chance of a May interest rate cut by a little bit, on top of the other economic numbers that we’ve had over the past couple weeks.” Both the ABS and analysts at JP Morgan said the primary factor inhibiting the inflation rate was petrol prices, which fell 12.2 per cent. Over the past 12 months to March, petrol prices have fallen 22.5 per cent.
Author: Imran Valibhoy
Apr 22, 2015
Since Joining the firm in 2006, Imran has worked on a range of M&A and Capital Market transactions in the natural resources, mining as well as projects in the renewable energy sector. Prior to joining Wise-owl, Imran worked at Euroz Securities in Perth, aiding in the advisory and valuation of companies in the mining and industrial sectors in Australia. Imran has a Masters in Banking & Finance from City University's Class Business School in London and a Bacheloor degree in Commerce from UWA.