As per last week’s figures released by the Australian Bureau of Statistics (ABS), Australian inflationary pressures prevailed in the last quarter of year 2016. Headline and core consumer price inflation (CPI) have remained below market expectations. The All Groups CPI has surged 0.5 per cent in the December 2016 quarter against a rise of 0.7 per cent in the September quarter 2016. The CPI has moved up 1.5 per cent over the twelve months to the December quarter 2016 against a rise of 1.3 per cent over the twelve months to the September quarter 2016, however the rise was still below the expectations. Looking at specific components, tobacco (+7.4 per cent), automotive fuel (+6.7 per cent), and domestic holiday travel and accommodation (+5.5 per cent) gave a significant boost. On the other hand, the most significant offsetting price falls for the quarter included those witnessed in international holiday travel and accommodation (-2.6 per cent), accessories (-5.1 per cent), and waters, soft drinks and juices (-3.2 per cent)..png)
Consumer Price Inflation Data (Source: Australian Bureau of Statistics)
The second-tier economics data revealed that producer prices have surged 0.5 per cent over the fourth quarter against the 0.3 per cent growth rate of the previous three months. On a yearly basis, the producer prices moved up 0.7 per cent from 0.5 per cent. A great upswing of about 12.4 per cent was noticed for export prices in the fourth quarter owing to rises in key commodities, iron ore and coal. This is expected to boost the Australia’s terms of trade.
It is worth noting that Japan has also lately reported for weak consumer prices like Australia that depicted softness in inflation. Japan’s consumer prices have dropped for a 10th straight month. However, the rate of the slip seems to have eased off. On the other hand, pulse of inflation seems to remain soft in Australia but has been a little better over second half of 2016. It is to be seen that whether this data along with next set of inflation data will be influencing any rate cuts in 2017 for Australia.
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