September data will keep inflation pressure on RBA: CommBank economists

Key arguments

• Trimmed mean inflation is forecast to rise 1.0% q/q, a fifth straight quarter between 0.8% and 1.0% and above the RBA's August 0.8% forecast.
• CBA's baseline is a November hold, but the decision hinges on the CPI outcome and composition, especially services breadth and persistence.
• Fuel (September +9.8%, annual ~24%) and firm market services inflation (4.1% to 4.3%) keep price pressure on the RBA.
• Housing costs are easing at the margin (new dwellings 5.4% to 4.9%), while rents (~3.5%) and rates and charges (+4.3%) stay firm.

Corresponding source evidence

1. • CBA expects underlying inflation to remain at 3.6%.
2. Australia’s September quarter inflation figures are expected to show little further progress in bringing underlying price pressures down, putting the Reserve Bank of Australia’s next interest rate decision firmly in focus.
3. Commonwealth Bank Senior Economist Trent Saunders said he expects the key trimmed mean measure of inflation - the RBA’s preferred measure, which excludes one-off spikes and outliers to measure underlying inflation - to have risen 1.0% over the September quarter, leaving the annual rate at 3.6%.