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Justin Smirk, Research Analyst at Westpac, points out that Australia’s September Quarter CPI printed 0.4%qtr, compared to the market median and Westpac forecast for 0.5%.

Key Quotes

“With base effects the annual rate eased back to 1.9%yr from 2.1%yr in Q2. Inflation continues to bump along just at, or just under, the bottom of the RBA’s target band.”

“The average of the core measures, which are seasonally adjusted and exclude extreme moves, rose 0.3%qtr meeting our expectations. In the quarter, the trimmed mean gained 0.37% while the weighted median lifted 0.28%. The annual pace of the average of the core measures printed 1.7%yr, a further deceleration from 1.8%yr in Q2 2018 and 2.0% in Q1.”

“Incorporating revisions, the six month annualised growth in core inflation is only 1.5%yr which is well below the bottom of the RBA target band and the slowest pace since September 2016.”

“We now have had two consecutive years of forecasters over-estimating the quarterly CPI print. The average error since the December quarter 2016 is +0.14ppt.”