Yesterday’s monthly inflation figure was a bizarre affair. The 3.4% print was materially below the 3.6% expected, but bond markets and the AUD sold off.
The RBNZ meeting was pending, but even so, this was a preposterous reaction.
The monthly fall in Aussie inflation was 0.33%, and, as well as missing expectations, it illustrated considerable slowing in Alboflation and services inflation.
Indeed, the “core inflation” print cratered below the RBA’s outlook, which should surprise nobody given its gormless forecasting record.
Monthly Q/Q core inflation annualised is now 2%, at the bottom of the RBA range! From Justin Fabo’s Antipodean Macro:
December monthly inflation was 0.7% and November 0.5%. February will have to rip higher to get anywhere near the RBA’s guesstimate of 0.8% Q/Q.
Led by a services implosion:
And energy:
Goods were higher than expected, but these should revert lower in due course:
It’s early days for Q1 inflation formation, but at this stage, the risks are tilted towards another big miss versus the RBA outlook.
