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Weekly Economic Commentary

Weekly Economic Commentary

Categories: General, General

There will be a lot of attention focussed on the release of the September quarter inflation data this week. Economists are forecasting that third-quarter CPI will show the effect of the post 30 June hikes in electricity and gas prices and that headline inflation was up 0.8% in the quarter but steady at 1.9% over the year. The RBA’s preferred measure of underlying or core inflation is forecast to be more subdued, rising 0.5% in the quarter but the annual rate rising to 2.0% from 1.8%.

The RBA has continued to revise its CPI forecasts (refer chart below) and still believes that inflation will return to its 2% to 3% target band over time. With this latest measure of inflation expected to be at the lower end of the RBA’s target band, a higher or lower than forecast CPI number this week will be unlikely to change the RBA’s thinking on monetary policy.

Core Measure of Inflation Chart

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Source: Rural Bank

 

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