Australia Q3 CPI Preview

The Australian government publishes official Consumer Price Inflation (CPI) data every quarter, and Q3 CPI data is due for release on October 26th. Inflation is a key consideration when it comes to the outlook for Reserve Bank of Australia's (RBA) monetary policy.

Analysts expect underlying inflation in the third quarter to remain weak. The RBA is sticking to its long-standing 2-to-3 percent inflation target band under new governor Philip Lowe. Some economists have questioned whether the RBA's inflation target over time remains appropriate given inflation has been below the band since late 2014.

"We expect the trimmed mean to have risen by 0.3% q/q and the weighted median by 0.4% q/q. This would see the average of the two underlying measures rise by 0.4% q/q and be steady at 1.5% y/y," said ANZ in a note to clients.

In its recent communication, the RBA has sounded comfortable about policy settings. The changes to the statement on the conduct of monetary policy have increased the RBA’s ability to tolerate below-target inflation on financial stability grounds.