October to December quarter inflation data from Australia

'Headline' is 0.6% q/q lower than was expected, which was sorta expected if you know what I mean (from my earlier preview)

  • expected is +0.7%,
  • prior was +0.6%

And 1.9% y/y lower than was expected

  • expected is 2.0%
  • prior 1.8%

'Trimmed mean' ('core' inflation figure where the RBA target band is 2 -3%)

0.4 % q/q lower than was expected

  • expected 0.5%,
  • prior 0.4% q/q

1.8% y/y in line

  • expected 1.8%
  • prior 1.8%

'Weighted median' CPI, also a core measure

0.4 % q/q in line

  • expected 0.4%
  • prior was 0.3%

2.0 % y/y higher than expected

  • expected 1.9%
  • prior was 1.9%

The Australian dollar is down a few points but off its lows hit immediately after the data. I argued in The Australian CPI is today - what for the AUD? that the NZ data last week was a lower than expected result, which had raised expectations of a similar result from Australia in today's data ... and that's what we have ended up with (though not to the same extent as the big NZ miss). So, some shorts are holding the AUD up right now. I expect we'll see some more sellers come in soon enough though that'll weight somewhat on the AUD.

And, I should add, the core measures ... a bit of a miss on the q/q trimmed mean. The RBA is not going to be too fussed over this, its ait's a small hiccup (that's how they'll view it, rightly or wrongly). The RBA target band is 2 to 3% for the y/y and you see, the trimmed mean is under there (while the weighted median is ambling at the bottom now in Q4) .... this is a 'flexible' target, though. The RBA will argue they want inflation in the band over the course of a cycle, which conveniently gives them wiggle room. Long story short - the RBA is still on hold for a good while to come on today's inflation result. the RBA next meet on February 6, Tuesday next week.

ps. While it has not garnered the same amount of attention, the private sector credit data out at the same time is a poor miss indeed and the detail is not great either:

ps. Stay tuned for the China data due at 0100 GMT - that's the next big influence on the AUD:

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