Australia and New Zealand Bank’s research team notes that the Australia’s Q2 headline inflation rebounded after being flat in Q1 as in annual terms, it increased to 1.6% (from 1.3% in Q1).
Key Quotes
“The largest positive contributions for the quarter came from fuel prices rising 10.2%, international holiday travel and accommodation increasing by 2.7% and tobacco prices rising 2.4%. Partly damping these increases were fruit and vegetables prices falling 2.8% and electricity prices coming off 1.7%.”
“Importantly, trimmed mean inflation, the measure of inflation most focused on by the RBA, increased 0.4% q/q. This saw the annual number unchanged at 1.6%. The RBA in its May SoMP forecast inflation to be 1.6% by June 2019. So although 1.6% is below its inflation target, this print does not put pressure on the Bank to cut interest rates quickly again and allows it the room to see how future data play out.”
“Although trimmed mean inflation picked up this quarter, the ANZ Diffusion Index (which measures the proportion of the basket with annualised price rises of 2.5% or more) fell to 34% from 44% in Q1.”
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