Australian CPI due at the bottom of the hour – what to expect and why its not official

Snippet preview via Commonwealth Bank of Australia:

• We anticipate headline CPI inflation remained at 2.1%/yr in October. While a soft monthly outcome a year ago makes it hard for the annual rate to remain low, we expect a further fall in electricity prices to weigh on inflation.
• The Australian Bureau of Statistics (ABS) noted households that missed out on the first quarterly electricity rebate because of their billing cycle would receive two instalments in October.
• The available evidence in other price surveys indicate the balance of inflation risks is skewed to the downside.

And, via Westpac:

• In September, the annual pace of inflation for the Monthly CPI
  dropped from 2.7% to 2.1%. As the data is released on the
  same day of the quarterly CPI it is often lost in the excitement.
• The CPI Monthly Indicator is not a pure monthly CPI, hence
  the Indicator tag, as many components are estimated once
  a quarter with the data being released in the month of the
  survey. However, while the headline measure is not a good
  guide to headline CPI, used judiciously, it is our best source of
  information for the components of quarterly CPI.
• Westpac’s October near-cast is -0.2%mth which will see the
  annual pace bump up to 2.3%yr.

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I posted this info earlier, but ICYMI:

In Australia, the Consumer Price Index (CPI) measures the average change over time in the prices paid by households for a fixed basket of goods and services. Traditionally, the Australian Bureau of Statistics (ABS) has published CPI data quarterly, providing comprehensive insights into inflation trends.

To offer more timely information, the ABS introduced a Monthly CPI Indicator in October 2022. This monthly indicator includes updated prices for around two-thirds of the items in the CPI basket, offering a more frequent snapshot of inflation. However, it is less detailed than the quarterly CPI, as it covers fewer items and provides data only at the national level. The monthly indicator includes aggregate headline CPI, trimmed mean, each of the 11 CPI groups (e.g., clothing & footwear, health), and some selected expenditure classes (e.g., automotive fuel, new dwelling costs, rents, domestic and international travel, and some food categories).

While the monthly CPI indicator follows similar trends to the quarterly CPI, they are not identical. This is because, when prices are collected less frequently than monthly, the monthly CPI indicator assigns price changes to the month they are collected, whereas in the quarterly CPI series, price changes are allocated across the entire quarter. Therefore, the average of the index in the three months for the monthly CPI indicator will not equal the index of the quarterly CPI.

In summary, the monthly CPI indicator provides more frequent updates on inflation trends, while the quarterly CPI offers a more comprehensive and detailed analysis.

As for the prior data, last month we had the quarterly (Q3) and monthly (September) data. In the September 2024 quarter, Australia’s Consumer Price Index (CPI) rose by 0.2%, marking the lowest quarterly increase since June 2020. Annually, the CPI increased by 2.8%, down from 3.8% in the June quarter, bringing inflation within the Reserve Bank of Australia’s (RBA) target range of 2–3% for the first time since late 2021.

For September 2024, the Monthly CPI Indicator showed a 2.1% increase over the previous 12 months.

Despite the overall decline in inflation, underlying measures, such as the trimmed mean, remained elevated at 3.5%, indicating persistent inflationary pressures in certain sectors.

These figures suggest that while headline inflation has moderated, core inflation remains above the RBA’s target, potentially influencing future monetary policy decisions towards holding rather than cutting rates.

This article was written by Eamonn Sheridan at www.forexlive.com.