| Consensus | Consensus Range | Actual | Previous | Revised | |
|---|---|---|---|---|---|
| CPI - Q/Q | 0.8% | 0.7% to 0.9% | 0.9% | 0.2% | |
| CPI - Y/Y | 2.3% | 2.2% to 2.3% | 2.4% | 2.4% | |
| Trimmed Mean - Q/Q | 0.7% | 0.5% | |||
| Trimmed Mean - Y/Y | 2.9% | 3.2% | 3.3% | ||
| Weighted Median - Q/Q | 0.7% | 0.5% | 0.6% | ||
| Weighted Median - Y/Y | 3.0% | 3.4% | 3.5% |
Highlights
Australian quarterly CPI data published today showed steady price pressures in the three months to March, with headline inflation unchanged at 2.4 percent, its lowest level since 2021 and close to the mid-point of the Reserve Bank of Australia' target range of two percent to three percent. Underlying measures of inflation moderated, while monthly CPI data also released today also showed steady headline inflation in March.
The consumer price index rose 0.9 percent on the quarter in the three months to March, up from an increase of 0.2 percent in the three months to December. This was above the consensus forecast of 0.8 percent. Food, healthcare, transport and housing prices recorded increases on the quarter, offset by falls in clothing and communication prices. Headline CPI inflation at 2.4 percent was just the consensus forecast of 2.3 percent.
Measures of core inflation, which exclude the impact of volatile price changes, moderated in the three months to March. The trimmed mean CPI advanced 0.7 percent on the quarter after rising 0.5 percent previously, with the year-over-year increase falling from 3.3 percent to 2.9 percent. The weighted median CPI inflation measure rose 0.7 percent on the quarter after increasing 0.6 percent previously, with the year-on-year increase falling from 3.5 percent to 3.0 percent.
At their most recent policy meeting earlier in the month, the RBA left policy rates on hold, with officials noting then that inflation"remains too high". The fall in underlying measures of inflation reported today, however, will likely reassure officials that price pressures are moderating and will likely strengthen the case for a cut in policy rates at the next meeting scheduled mid-May.
The consumer price index rose 0.9 percent on the quarter in the three months to March, up from an increase of 0.2 percent in the three months to December. This was above the consensus forecast of 0.8 percent. Food, healthcare, transport and housing prices recorded increases on the quarter, offset by falls in clothing and communication prices. Headline CPI inflation at 2.4 percent was just the consensus forecast of 2.3 percent.
Measures of core inflation, which exclude the impact of volatile price changes, moderated in the three months to March. The trimmed mean CPI advanced 0.7 percent on the quarter after rising 0.5 percent previously, with the year-over-year increase falling from 3.3 percent to 2.9 percent. The weighted median CPI inflation measure rose 0.7 percent on the quarter after increasing 0.6 percent previously, with the year-on-year increase falling from 3.5 percent to 3.0 percent.
At their most recent policy meeting earlier in the month, the RBA left policy rates on hold, with officials noting then that inflation"remains too high". The fall in underlying measures of inflation reported today, however, will likely reassure officials that price pressures are moderating and will likely strengthen the case for a cut in policy rates at the next meeting scheduled mid-May.
Market Consensus Before Announcement
CPI seen up 0.8 percent on quarter and 2.3 percent on year.
Definition
The Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by households for a fixed basket of goods and services. In Australia, the CPI measures the changes in the price of a fixed basket of goods and services, acquired by household consumers who are residents in the eight State/Territory capital cities. (Darwin, Perth, Sydney, Melbourne, Hobart, Brisbane, Canberra and Adelaide).
Data are released quarterly and, since 2022, monthly. Quarterly inflation data measure the year-over-year change in the index relative to the same quarter twelve months previously. Monthly inflation data measure the year-over-year change in the index relative to the same month twelve months previously.
Data are released quarterly and, since 2022, monthly. Quarterly inflation data measure the year-over-year change in the index relative to the same quarter twelve months previously. Monthly inflation data measure the year-over-year change in the index relative to the same month twelve months previously.
Description
The consumer price index is the most widely followed indicator of inflation. An investor who understands how inflation influences the markets will benefit over those investors that do not understand the impact. In countries such as Australia, where monetary policy decisions rest on the central bank's inflation target, the rate of inflation directly affects all interest rates charged to business and the consumer.
Inflation is an increase in the overall prices of goods and services. The relationship between inflation and interest rates is the key to understanding how indicators such as the CPI influence the markets - and your investments. Inflation (along with various risks) basically explains how interest rates are set on everything from your mortgage and auto loans to Treasury bills, notes and bonds. As the rate of inflation changes and as expectations on inflation change, the markets adjust interest rates. The effect ripples across stocks, bonds, commodities, and your portfolio, often in a dramatic fashion.
By tracking inflation, whether high or low, rising or falling, investors can anticipate how different types of investments will perform. Over the long run, the bond market will rally (fall) when increases in the CPI are small (large). The equity market rallies with the bond market because low inflation promises low interest rates and is good for profits.
For monetary policy, the Reserve Bank of Australia generally follows the annual change in the consumer price index. It has an inflation target of 2 percent to 3 percent. The RBA also has two preferred core or analytical measures - the weighted and trimmed means. The trimmed mean is a method of averaging that removes a small percentage of the largest and smallest values before calculating the mean. After removing the specified observations, the trimmed mean is found using an arithmetic averaging formula. The weighted mean excludes certain items from the CPI basket (the exclusion approach). Typically, the excluded items are those that are volatile and/or display pronounced seasonal patterns, and those that are subject to administrative price setting.
Inflation is an increase in the overall prices of goods and services. The relationship between inflation and interest rates is the key to understanding how indicators such as the CPI influence the markets - and your investments. Inflation (along with various risks) basically explains how interest rates are set on everything from your mortgage and auto loans to Treasury bills, notes and bonds. As the rate of inflation changes and as expectations on inflation change, the markets adjust interest rates. The effect ripples across stocks, bonds, commodities, and your portfolio, often in a dramatic fashion.
By tracking inflation, whether high or low, rising or falling, investors can anticipate how different types of investments will perform. Over the long run, the bond market will rally (fall) when increases in the CPI are small (large). The equity market rallies with the bond market because low inflation promises low interest rates and is good for profits.
For monetary policy, the Reserve Bank of Australia generally follows the annual change in the consumer price index. It has an inflation target of 2 percent to 3 percent. The RBA also has two preferred core or analytical measures - the weighted and trimmed means. The trimmed mean is a method of averaging that removes a small percentage of the largest and smallest values before calculating the mean. After removing the specified observations, the trimmed mean is found using an arithmetic averaging formula. The weighted mean excludes certain items from the CPI basket (the exclusion approach). Typically, the excluded items are those that are volatile and/or display pronounced seasonal patterns, and those that are subject to administrative price setting.
