Australia's Q4 CPI: All figures miss expectations

Following the marked improvement seen in Australia's Q3 2016 CPI readings, today's inflation figures for the Q4 showed a worsening picture, with all figures missing expactations. The results serve as a 'red flag', allowing room for the RBA to keep easing if conditions in the economy deteriorate in the near future. In the very short term though, the RBA is expected to remain neutral. 

Main headlines

CPI headline q/q +0.5% vs  0.7% exp and 0.7% prior

CPI headline y/y +1.5% vs 1.6% exp and 1.3% prior

RBA trimmed mean +0.4% vs 0.5% exp and 0.4% last

RBA trimmed mean y/y +1.6% vs 1.7% exp and 1.7% last

Q4 KEY FIGURES

THE ALL GROUPS CPI

• rose 0.5% this quarter, compared with a rise of 0.7% in the September quarter 2016.
• rose 1.5% over the twelve months to the December quarter 2016, compared with a rise of 1.3% over the twelve months to the September quarter 2016.

OVERVIEW OF CPI MOVEMENTS

• The most significant price rises this quarter are tobacco (+7.4%), automotive fuel (+6.7%), domestic holiday travel and accommodation (+5.5%) and new dwelling purchase by owner-occupiers (+0.5%).
• The most significant offsetting price falls this quarter are international holiday travel and accommodation (-2.6%), accessories (-5.1%) and waters, soft drinks and juices (-3.2%).