A new seasonally-adjusted measure of inflation released yesterday by the Bureau of Statistics shows that instead of staying firm at 0.9 per cent in the June quarter as had been reported, the underlying measures of inflation slipped back to a less worrying 0.6 per cent.
The annual underlying result was a touch lower at 2.55 per cent instead of the previously-reported 2.70 per cent.
The readjustment knocked more than a cent off the Australian dollar pushing it down to 102.10 US cents, its lowest close in a month.
The futures market pushed up the implied probability of a double rate cut next month from 63 t0 72 per cent.
“The new numbers suggest there was about 0.15 percentage points less inflation in the Australian economy than previously estimated,” said HSBC economist Paul Bloxham. “Quarterly inflation was well inside the target band in June, rather than above it. I think we will see the Bank on hold for the rest of the year"...
From the September quarter CPI release due in October the Bureau will publish seasonally adjusted inflation figures alongside the headline figures. It has identified seasonality in 64 of the 90 expenditure classes whose prices it measures. It will also remove from both measures an erratic part of the so-called “deposit and loan index” - the fourth biggest component of the consumer price index.
The changes should make the CPI easier to interpret and easier to forecast.
Published in today's SMH and Age
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