Monthly inflation takes a dump

Via the ABS.

CPI analytical series
	Seasonally adjusted	2.4	2.4	2.1
	CPI excluding volatile items* and holiday travel	2.6	2.8	2.7
	Annual trimmed mean	2.7	2.8	2.4

Two basis points under market expectations. The chart:

Trimmed mean inflation is also running well behind the RBA’s forecasts, as illustrated below by Alex Joiner from IFM Investors:

On the components, note that administrative prices have not even begun to unwind. About 20% of the CPI automatically adjusts to headline inflation annually—health, education, booze, etc.—so there is still an embedded downside to come.

We are undershooting despite unwinding energy rebates, which reboot in July for six months.

The lunatic RBA has overcooked it again, and the downside for rates is material.

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About the author

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.