Australia's Q4 inflation data preview: What to expect & its impact on RBA monetary policy

<p>Australia's Q4 inflation data is due on Wednesday, 31 January 2024</p><ul><li>at 11.30 am Sydney time, 0030 GMT and 1930 US Eastern time </li></ul><p>Note, there will be data for the December monthly CPI (underlined, this is the monthly CPI and is not the main focus) alongside the quarterly CPI. The Quareterly CPI is more complete than the monthly and is the main focus (boxed in the screen shot below). </p><p>Preview comments via Commonwealth Bank of Australia (in brief, bolding is mine)</p><ul><li>Our expectation is that we will see headline inflation having moderated to 4.2%/yr and the underlying pulse, as measured by the trimmed mean, to have eased to 4.3%/yr. </li><li>Discounting of goods around Black Friday will see outright price declines, weighing on overall inflation. </li><li>But we also expect services inflation moderated too. </li><li>With the ongoing contraction in real household disposable income, further large price increases are difficult to sustain. </li><li>Various government policies will also impact the quarterly read –an increase in the tobacco excise adding to inflation, but additional rent assistance and ongoing electricity rebates will have worked the other way. </li><li>The upshot is an outcome in line with or below our forecasts would be consistent with the RBA on hold when they reconvene in February. </li><li>We view the risks to our inflation forecast as slightly skewed to the downside. </li><li> An outcome in line with or below our forecast is consistent with monetary policy on hold in February (our base case).</li><li>And it supports our call for an easing cycle to commence in September.</li></ul>

This article was written by Eamonn Sheridan at www.forexlive.com.