Not here (at least, not in the CPI). From Westpac on the TD monthly number:
The Gauge rose 0.2% in Oct, following a mild 0.1% in Sep and three consecutive flat prints before that.
The annual pace lifted to 2.3%yr in Oct from 2.2%yr in Sept but this is still less than the 2.4%yr in Aug, 2.5%yr in Jul and a recent peak of 3.0% in Jun. The most recent low in the annual pace of the Inflation Gauge was 2.1%yr in Oct 2013.
In the first half of 2014 the Gauge was threatening to breach the RBA’s inflation target band; it is now back in the bottom half of the band.
The annualised three monthly pace has lifted to 0.9%yr in Oct, from the Sep print of 0.3%yr and the Aug low of 0.2%yr. The three month annualised pace is still well down on the 3.6%yr pace in May.
Westpac estimates a small negative seasonal factor for Oct and we again highlight that the4th quarter is a seasonally soft one for the Gauge.
The trimmed mean of the Inflation Gauge increased by 0.1% in Oct (2.5%yr), following a similar rise in Sep (0.1%mth/2.3%yr). The trimmed mean increased by 0.2% over the three months to Oct, following a rise of 0.1% for the three months to Sep. We are seeing a modest, but contained uptick in the pace of growth in the trimmed mean Inflation Gauge.
Contributing to the overall change in Oct were price rises for automotive fuel (+3.1%), holiday travel & accommodation (+3.6%) and non-alcoholic beverages (+2.0%). These were offset by falls in prices for fruit & vegetables (–1.8%), newspapers, books & stationery (–2.0%), and health (–1.0%).
There was, however, a jump in the net balance (number of price rises less number of price falls) to 18 in Oct from 6 in Sep. The monthly print is now greater than the long run average of 10 and the 2013 average of 9. It is also a step up on the average of 12 for the last six months. The three month average is back to the long run average of 10 but we should note there appears to be some positive seasonality in the Oct net balance. As such, we will wait to see if this is the start of a new broader price trend.
The Q3 CPI was stronger than was the Gauge was suggesting it should be but the still relatively modest 0.5%qtr in the CPI left if lagging behind the Gauge. So while the Gauge is again pointing to a very modest Q4 CPI print, we caution that while the CPI runs behind the Gauge, there is always the scope for a catch-up in any one quarter.
Westpac’s preliminary Q4 CPI forecast is a very benign 0.3%qtr rise. This preliminary estimate will be refined as more data becomes available.
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific's leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
