Australia Westpac Melbourne Institute consumer sentiment dropped -2.3% to 103.6 in August, down from 106.1. The index pared back half of the “surprisingly strong gains in June to Jule” as the impact of government’s tax cuts faded. The decline also came against the backdrop of rising global trade tension and housing markets correction in Sydney and Melbourne.
Westpac pointed out RBA’s projection that inflation will hit 2.25% by 2020 and expects next move is up. It noted an “obvious headwind” for RBA is “the impact that five years of underperformance in inflation will have on households’ and firms’ expectations.” And, “lower expectations will make it that much more difficult to lift inflation back into the band”.
Westpac also noted that “certainly it will be quite some time before the Bank has a case to adjust the cash rate.” And it maintains the view that RBA will be on whole in both 2018 and 2019.
Also from Australia, Wage price index rose 0.6% qoq, 2.1% yoy in Q2, in line with expectation. Private sector wage price grew 0.5% qoq, 2.0% yoy. Public sector wage grew 0.6% qoq, 2.4% yoy.
