Unlike the weeks prior to recent CPI reports, the level of attention given to this latest CPI report has been relatively scant. The latest RBA board meeting minutes indicate Australia’s central bank is focussed on the employment market and risks in the housing markets (Sydney and Melbourne). Mentions of underlying inflation were mostly limited to stating how any rise was expected to be gradual. While some commentators noted the importance of the upcoming CPI report, other issues, such as Trump’s tax plans, tended to divert attention away from it.
Michael Blythe, Commonwealth Bank
The main message from the CPI is that inflation rates remain low ‑ but the low point is behind us. And inflation rates will grind slowly higher from here…It is difficult to get concerned about inflation prospects when wages growth and labour costs remain very well contained. Nevertheless, the housing component of the CPI may only add to RBA concerns about the housing market more broadly. New dwelling purchase costs, closely correlated with house prices, was highlighted by the ABS as one of the most significant price rises in Q1.