Australian Q3 inflation data due today, preview

Australian Q3 inflation data is due Wednesday 27 October 2021 at 0030 GMT 

For the headline:

Core inflation: Trimmed mean

  • expected 0.5% q/q, prior 0.5%

  • expected 1.8% y/y, prior 1.8%

For the weighted median, another measure of core inflation.

  • expected 0.5% q/q, prior 0.5%

  • expected 1.9% y/y, prior was 1.7%

Short preview post here from yesterday. 

Via NAB:

  •  the risks to our forecasts are tilted to the upside, with the key risk coming from higher than expected new dwelling construction costs which have been restrained due to the HomeBuilder subsidy which is treated as an effective price cut for the consumer.

Via ASB:

  • The pandemic hit the Australian economy hard over Q3 21 and that will have implications for the Australian CPI over the period. Sydney and Melbourne were essentially in lockdown for the entire quarter and that will weigh on some parts of the CPI basket. 
  • Notwithstanding, we think the Q3 21 CPI will show a modest acceleration in underlying inflation on a six-month annualised basis. It will set the scene for a firmer inflationary pulse next year.
  • The risk lies with a stronger print, particularly in light of the Q3 21 NZ CPI

Via ING:

  • Markets are widely expecting a deceleration from the 3.8% 2Q figure as Covid restrictions generated some deflationary pressures in late summer. Consensus is reported at 3.1% for the headline rate, but could actually be a bit higher after New Zealand’s very strong (4.9%) read for the same quarter. 
  • Anyway, decreasing price pressures should all but underpin the RBA’s dovish stance and we think the release may prompt some re-pricing of tightening expectations (40bp priced in for the next year) and weigh on AUD.

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