Australia's inflation indicators to provide leeway for further easing

Australia's headline CPI inflation for Q2 was relaesed today. The headline CPI inflation posted 1.5% yoy growth and 0.7% qoq in Q2. Due to higher fuel prices and lagged effects of the weaker AUD, RBC Capital markets was expected the headline CPI inflation to up from 1.3%y/y to 1.7% in Q2. 

"Domestically generated inflationary pressures, however, remain weak given the sluggish pace of wage growth and stagnant unit labour costs. Which is expected to be reflected in the core measures, including a 0.2ppt deceleration in the trimmed mean metric to 2.1%y/y. The inflation indicators should continue to provide more than enough leeway for further easing, which we expect will next occur in Q4", argues RBC Capital markets.