The QII headline CPI grew by 0.4%, lower than market expectations which centred on a rise of 0.5% {CBA (f) 0.4%}. Annual growth stepped down from 2.5% to 2.4%.
The more important monetary policy measure of underlying inflation printed a shade higher than expected at 0.6% in QII following QI’s reading of 0.4%. From a policy perspective, the latest CPI offerings mean that risks remain skewed towards another rate cut. On a six-month-ended basis that smooths out quarterly volatility, the QII underlying CPI was running at 2.1%, the bottom of the RBA’s target band. Together with a softish economy, and an uptrend in unemployment, the RBA will be able to comfortably retain its easy bias at the very least.
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Commonwealth Bank