‘We see a genuine recovery in core inflation as a quite distant prospect, which biases the RBA to ease again.’
Australian consumer headline inflation growth missed forecasts in the three month to March, while core inflation rose in line with expectations, official figures revealed on Tuesday. The Australian Bureau of Statistics reported that its headline CPI came in at 0.5% in the Q1 of 2017, unchanged from the preceding quarter, while market analysts anticipated an increase of 0.6% during the reported quarter. On an annual basis, headline inflation climbed 2.1%, missing markets’ expectations for a 2.2% rise. Nevertheless, the Trimmed Mean CPI, the ABS’ core inflation measure, advanced 0.5% on a quarterly basis, in line with forecasts. Year-over-year, core inflation rose 1.9%, surpassing expectations for a 1.8% climb. Despite the rise in the core inflation rate, analysts stated that overall inflation was modest and driven by some temporary factors, such as the change in crude oil prices, forcing the Reserve Bank of Australia to remain on hold for an undefined period of time. Prices for education, health and transport climbed 3.1%, 2.0% and 1.5%, respectively. However, the following gains were offset by price declines in other categories. Prices for clothing and footwear dropped 1.4%, for furnishings, household equipment and services prices fell 1.0% and for recreation and culture prices plunged 0.7%.
