September Quarter Consumer Price Index CPI: 1.6%qtr/0.7%yr Trimmed mean: 0.4%qtr/1.2%yr Weighted median 0.3%qtr/1.3%yr
The ABS reported a 1.6% jump in the September quarter CPI and despite the June CPI reporting a record fall in the series 72 year history of –1.9% the bounce back was smaller than the 3.8% GST surge in September 2000. The increase today was on the market median of 1.6% and greater than Westpac 1.1% forecast.
The core measures were also on the stronger side of our expectations. The trimmed mean lifted 0.4%qtr (WBC forecast 0.0%) while the weighted median gained 0.3% (WBC forecast 0.3%). If you exclude the imputed series this quarter the trimmed mean lifted 0.3%.
The main surprise compared to our forecast was the flat print for housing compared to our –2.0% (for a contribution difference of –0.46ppt). The other significant surprise was the 2.5% rise in car prices compared to our 0.4% forecast (–0.06ppt contribution difference).
As expected, the September quarter jump was mainly due to the ending of free child care in all states except Victoria. Child care is still 26% below the pre-COVID level so will be contributing to further price rises in the December quarter. Overall household equipment and services rose 12% (WBC forecast 11.6%) and excluding child care this group would have risen 1.3%.
Also as expected there was a strong rise in for automotive fuel (9.4%) following a rebound in world oil prices, and pre-school and primary education (11.1%), with before and after school care no longer being free.
The ABS also reported other notable increases including furniture (6.4%), major appliances (5.3%) and small appliances (5.8%). The ABS pointed to strong demand and supply shortages led to price rises and less discounting for many household durable goods.
The stronger than expected rise in the trimmed mean is reason for us to return to our medium term forecasts to see if the risk to the medium term outlook for inflation might be a bit stronger than we have anticipated. This will be progressed through our normally monthly reviews as we prepare the November Market Outlook.
