* The CPI rose by 1.2% in QIII and annual growth now stands at 2.2%.
* The underlying inflation print stands at 2.3%pa.
* The RBA will be able to maintain its easing bias but the preference for any further stimulus to come via a lower currency remains.
* We expect the current 2½% cash rate to be the low for the cycle.
The QIII CPI rose by 1.2%, notably above market expectations (Mkt and CBA: +0.8%). The main “surprises” were the size of rises in petrol and holiday travel & accommodation. These price categories are heavily influenced by the AUD. Nevertheless, annual growth stepped down from 2.4% to 2.2%. The RBA’s preferred underlying inflation measures averaged out at 2.3%pa. The key inflation measures have printed near the bottom of the 2 3% target range.
Read the full report: Economic Research
Commonwealth Bank