Australia: Inflation at over three-decades high in Q3
Annual inflation came in at 7.3% in Q3, up from Q2s 6.1%, hitting the highest reading since Q2 1990 and beating market expectations. Therefore, inflation moved further above the Reserve Banks 2.0%–3.0% target band. The main drivers of the acceleration were housing and food.
Meanwhile, consumer prices soared 1.8% over the previous quarter in Q3, matching Q2s jump.
Commenting on the short-term implications for monetary policy, Robert Carnell, regional head of research for Asia-Pacific at ING, stated:
“At their October meeting, the RBA dropped the pace of their tightening to 25 basis points, hinting that they would prefer to move ahead at a slower pace as they pushed rates into restrictive territory. Today’s inflation data suggest that this moderation may prove short-lived. It is hard to see how the RBA can ignore such an outsized miss on inflation, even though they have been clear in their statements that they didn’t think inflation had yet peaked. This inflation data adds pressure on the RBA to revert to a 50bp tightening pace next month..”