by Chris Becker
The TD Securities – Melbourne Institute Monthly Inflation Gauge barely rose during August – up 0.1% after the 0.2% lift-off in July. This is going to weigh on the RBA tomorrow.
Salient points from TD:
- In the twelve months to August, the Inflation Gauge increased by 1.7 per cent, following a rise of 1.6 per cent for the twelve months to July.
- Contributing to the overall change in August were price rises for international holiday travel and accommodation (+4.0 per cent), newspapers, books and stationery (+5.5 per cent) and alcoholic beverages (+0.8 per cent).
- These were offset by price falls in fuel (-2.1 per cent), domestic holiday travel and accommodation (-2.0 per cent) and fruit and vegetables (-0.5 per cent).
- The trimmed mean of the Inflation Gauge was flat in August, to be 1.5 per cent higher than a year earlier.
While we will finalise our forecasts with our September Inflation Gauge report, we see annual inflation running at a low 1.7 per cent and 2.4 per cent respectively, comfortably within the RBA’s two to three per cent target range.
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Comfortable depends on your point of view. I’m sure the RBA would prefer a much higher print, but they ain’t going to get it in the deflationary period ahead. RBA will still hold, but they really really need to get aggressive on selling down the dollar like it was 2012…