The TD Securities – Melbourne Institute Monthly Inflation Gauge is out and rose by 0.1 per cent in October, following a 0.1 per cent rise in September.
In the twelve months to October, the inflation gauge rose by 2.6 per cent, following the 2.8 per cent rise over the twelve months to September.
According to the release:
Contributing to the overall change in October were price rises for holiday travel and accommodation, new dwelling purchase by owner-occupiers, and automotive fuel. These were offset by falls in fruit and vegetable price, rent, and furniture and furnishings. Fruit and vegetable prices fell by 4.8 per cent in October, while fuelprices rose 0.9 per cent. The trimmed mean of the Inflation Gauge rose by 0.1 per cent in October, following a similar rise in September.
The media is reporting this as a new reason to cut interest rates, which of course, it isn’t. In some minor way it makes a rate cut slightly more possible but the CPI was evidence enough that inflation has peaked for now and that rate cut is now possible. You can see that in both the monthly and yearly charts:
The only remaining question is whether the RBA will see the need to support demand, which was its second condition for a cut. In my view, it will.
