Australian inflation data a little hot, unsure if enough to push RBA to raise

Australia's Consumer Price Index (CPI) rose by 1.2%, slightly surpassing economists' expectations of a 1.1% increase. Annually, CPI showed a growth of 5.4%, exceeding the forecasted 5.3%. The core CPI measure, which excludes food and energy costs, also rose by 1.2% for the quarter, higher than the anticipated 1.1%. In annual terms, core inflation increased by 5.2%, surpassing the predicted 5%. These figures indicate a higher-than-expected inflation rate. The ABS pointed to fuel costs, electricity and rents as the biggest contributors to inflation during the quarter. Rising oil prices in the September quarter contributed to increased costs for many sectors, however, adding to global inflationary pressures. Here's a breakdown for the major cities of what that looked like. . Source: ABS Significance for November rate call In her first prepared speech last night, Governor Michele Bullock emphasised the possibility of further rate hikes if there is a significant upward revision to the inflation outlook, saying she is maintaining a 'low-tolerance policy' to long-term inflation. She went on to say: 'The board will not hesitate to raise the cash rate further if there is a material upward revision to the outlook for inflation' With the harder tone and today's slight uptick, markets have priced a 30% chance of a raise, but it continues to climb at the time of writing. The markets quickly responded to the news with a sharp drop in the ASX 200 as the data came through at 11:30am (AEST). Source: Market Index The RBA is set to convene on November 7 to determine whether to maintain the cash rate at 4.1% for the fifth consecutive month. This decision holds significant importance in managing inflation without turning the country into recession. The big question next is if this is considered a material uptick. the equity markets believed it was, but what about economists? For some, the 1.2% increase was ambiguous when it came to the RBA's decision, with AMP's Chief Deputy Economist Diana Mousina attributing it to a coin toss at this moment. 'A key number I was looking for was that underlying measure of inflation, and coming out of 1.2% over the quarter, I think that there is a complete 50-50 coin toss as to whether the RBA will hike rates in November because it is a bit of a grey area,' she said to ABC today. 'I was thinking if the number was closer to 1.3% then the Reserve Bank would probably hike, but 1.2% probably does still mean that inflation projections over the next two years are still intact.'

By Charlie Ormond

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Australian inflation data a little hot, unsure if enough to push RBA to raise

By Charlie Ormond

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