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Australian inflation data for Q4 2020 is due this week – preview

CPI data from Australia for the December quarter is due on Wednesday 25 January 2021 at 0030 GMT.

Headline

For
the y/y,

  • expected 07%, prior 0.7%

Core
inflation:

Trimmed
mean

  • expected 0.  q/q, prior 0.4%

  • expected 1.1% y/y, prior 1.2%

Weighted
median

  • expected 0.4% q/q, prior 0.3%

  • expected 1.2% y/y, prior was
    1.3%

A couple of snippets from bank previews f what to expect follow.

ASB:

  • we expect Australia’s headline inflation to rise 0.9% and the Reserve Bank of Australia’s (RBA) preferred trimmed mean measure to rise by a more muted 0.4%. 
  • We anticipate the normalisation of child-care costs and a strong lift in tobacco prices (due to the excise tax) to drive the solid bounce in Q4 headline inflation. 
  • Our central forecast is for low inflation to continue in 2021. However, a strong consumer-led recovery poses the risk of higher ‘demand-pull’ inflation.

Westpac:

  • forecasting a 0.7% lift in the Q4 CPI which will hold the annual rate steady at 0.7%yr. The trimmed mean is forecast to rise 0.3%qtr which will see the annual rate ease back from 1.2%yr to 1.1%yr which would be a new record low. 

***

Note, the first Reserve Bank of Australia meeting of 2021 follows on Tuesday February 2. The CPI data will go into policy considerations but the RBA is on hold for now. 

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