Australia’s Q4 CPI will be released on 28 January.
Following today’s November monthly CPI we have made some tweaks to our preliminary Q4 CPI preview (available here).
As discussed in our preliminary preview, our Q4 nowcasts are based on the pre-October methodology, including collection frequency and seasonal adjustment of CPI expenditure components (though we do highlight some challenges). This approach means that some of the discounting that occurs in November (e.g. ‘Black Friday’) and December (pre-Christmas sales) does not enter our Q4 nowcasts.
The RBA have said that inflation measures based on the pre-October methodology will remain their primary focus for the time being. Nevertheless, we expect Bank staff to interrogate the monthly CPI detail to get a feel for the momentum of underlying inflation through the quarter.
Our key takeaway is that underlying inflation appears to have moderated a little in Q4 but remained strong and above the RBA’s November SMP assumption (and well above the mid-point of the 2-3% target).
