September Quarter CPI Suggests RBA Rate Hike Soon

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By Rudi Filapek-Vandyck

According to the Australian Bureau of Statistics the headline CPI rose by 0.7% in the September quarter taking the annual inflation rate to 1.9%.

However, the Reserve Bank’s (RBA) statistical measures of core inflation increased strongly, averaging 0.95% in the quarter and 3.0% over the year. The so-called trimmed mean increased by 0.9% in the quarter and 2.9% over the year and the weighted median increased by 1.0% in the quarter and 3.1% over the year.

These numbers suggest interest rates are likely to go up this year, possibly as early as November.

The ABS reports the largest contributors to the (headline) CPI increase were for fruit  (+9.6%), vegetables (+7.9%), deposit and loan facilities (+2.2%), rents (+1.6%), other financial services (+2.3), house purchase costs (+1.0%) and electricity (+4.3%). Partially offsetting this were price falls for child care (-33.4%), automotive fuel (-3.7%), pharmaceuticals (-4.5%), audio, visual and computing equipment (-2.5%) and furniture (-1.5%).

FNArena will update on this matter with economist responses later today.

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