Monday, 23 April 2012

Deflation on the RBA Menu?

The Statement accompanying the April rates-on-hold decision of the RBA concluded:
  • “At today’s meeting, the Board judged the pace of output growth to be somewhat lower than earlier estimated, but also thought it prudent to see forthcoming key data on prices to reassess its outlook for inflation, before considering a further step to ease monetary policy.”
So what have the “key data on prices” so keenly sought by the RBA shown since that Statement.
  • The consumer price index rose 0.1% in the March quarter (it fell 0.2% seasonally adjusted).
  • The RBA underlying measure for the CPI rose 0.3% and annual inflation fell to a 13 year low of 2.1%.
  • The producer price index fell 0.3% in the March quarter.
  • Export prices fell 7.0% in the March quarter; import prices fell 1.2% in the March quarter.
  • The RP Data house price series, up to an including today, has fallen 0.6% so far in April.

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