ONLY CHARTS #177

Aus monthly CPI, Aus engineering construction

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1. Australia’s monthly CPI declined 0.24% m/m in August and slowed to +2.7% y/y from +3.5% y/y in July. This was close to our forecast of +2.6% y/y.

Slower year-ended headline inflation reflected sharply lower out-of-pocket electricity prices (-14.6% m/m), weaker petrol prices (-3.1% m/m) and the dropping out of a +0.6% m/m increase in August 2023.

2. The RBA has clearly stated it is focused on underlying measures of inflation.

Monthly trimmed mean inflation slowed to 3.4% y/y in August from 3.8% y/y in July.

Excluding petrol, fruit & veg and travel, year-ended inflation declined to +3.0% y/y in August from +3.7% y/y in July.

We have augmented that underlying inflation measure by also excluding electricity prices (light blue series). This measure has been less volatile recently than both the monthly trimmed mean and measure excluding petrol, fruit & veg and travel.

It rose +3.5% y/y in August - down from +3.8% y/y in July - and bang in line with our nowcast.