Aussie Q4 CPI: RBA undershoot

Australia’s Q4 CPI will be released on 31 January, just before the RBA Board meets on 5-6 February. The Bank will now release updated forecasts in the Statement on Monetary Policy (and provide a media conference) at the same time as the policy announcement.

Key expectations

The monthly CPI for November - which printed close to our expectations - provided key inputs to firm up ‘nowcasts’ of Q4 inflation. Our expectations are based on bottom-up estimates for all 87 CPI sub-components.

• Headline CPI inflation is expected to have been +0.7% q/q and +4.2% y/y in Q4 compared with the RBA’s November SMP forecast of +4.5% y/y.

• We expect trimmed mean CPI inflation to have been a little above +0.8% q/q and to round up to +4.3% y/y. This would be below the RBA’s November SMP forecast for +1.0% q/q and +4.5% y/y.