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Australia Inflation Q3 2019

Australia: Inflation inches up in Q3, but remains below the Central Bank’s target band

In the third quarter of 2019, consumer prices rose 0.5% over the previous quarter following a 0.6% increase in the second quarter, according to the Australian Bureau of Statistics (ABS). The figure matched market expectations. According to the ABS, Q3’s rise was mainly the result of higher prices for clothing and footwear, household equipment and for alcohol and tobacco, which were only partially offset by lower prices for communication and transport.

Inflation inched up to 1.7% in Q3 from Q2’s 1.6%, again hitting market expectations. Therefore, inflation remained below the Reserve Bank’s 2.0%–3.0% target band. Regional variations persisted: Inflation came in between 1.6% and 1.9% everywhere excluding Hobart, where it exceeded 2.0%, and Darwin, where it was 0.5%.

Some pick-up in wage growth and growing signs of bottoming out in house prices in the East coast will probably push inflation up going ahead, which should also be fueled by the lagged effects of the three rate cuts delivered by the Reserve Bank between June to October.

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