Australia: Inflation surprised to the upside in Q4 2020 – UOB

Economist at UOB Group Lee Sue Ann reviews the latest inflation figures in the Australian economy.

Key Quotes

“Australia’s headline CPI came in at 0.9% q/q for 4Q20, higher than the estimate of 0.7% q/q, following the 1.6% q/q reading in the third quarter.”

“Compared to the same period a year ago, CPI advanced 0.9% y/y, up from the 0.7% y/y reading in the previous three months. The increase in annual inflation largely reflects the unwinding of free child care and higher petrol prices, and contributed to the reversal of the June quarter fall of 0.3% y/y. These impacts are largely removed from measures of underlying inflation, with the trimmed mean measure remaining at a record-low of 1.2% y/y (0.4% q/q). The Reserve Bank of Australia (RBA)'s weighted median was up 0.5% q/q, up from a revised 0.2% q/q reading in 3Q20. Compared to the same period one year ago, it was 1.4% y/y, also higher from the revised 1.2% y/y reading in the previous quarter.”