The ABS will release its June quarter inflation report later on this morning. It’s often a market mover, particularly the core inflation reading.
Here’s the state of play.
- The report is based off movements in the retail prices of goods and services commonly purchased by metropolitan households.
- While the headline CPI figure garners plenty of attention, for financial markets all the interest is in the core inflation reading given its implications for monetary policy movements from the RBA.
- Underlining this point, of the 28 rate movements made during RBA governor Glenn Stevens’ tenure, 15 have directly followed the release of the ABS inflation report.
- As a consequence of this relationship the report often creates significantly volatility across Australian interest rate markets, as well as the Australian dollar, according to the NAB’s FX strategy team.
- During the March quarter headline inflation rose by just 0.2%, leaving the annual change at just 1.3%. Core inflation increased by 0.6% leaving the year-on-year rate slightly higher at 2.35%.
- Markets expect headline inflation to have increased by 0.8% during the June quarter leaving the annual rate slightly firmer at 1.7%.
- Of more importance to markets, core CPI is tipped to increase 0.6%. That would leave the annual rate at 2.2%, towards the lower end of the RBA’s 2-3% target band.
The ABS will release its CPI report at 11.30am AEST. Business Insider will have full coverage as soon as the data drops.