ANZ anticipates that Australia’s trimmed mean inflation is unlikely to accelerate to 0.9 per cent in the March quarter. According to ANZ’s head of Australian economics, Adam Boyton, simple modelling suggests an outcome closer to 0.7 per cent, unless January delivers an unusually strong monthly print. Boyton noted that a surprisingly accurate signal for the quarterly trimmed mean could be derived from the first month of each quarter’s monthly CPI data, based on recent historical trends.
Boyton explained that a month-on-month rise of 0.34 per cent in the January trimmed mean CPI would be necessary to push the March quarter outcome to 0.9 per cent. He emphasised that such a result has been rare since the monthly series began. “Over the 21-month history of the new monthly CPI, a trimmed mean increase of 0.34 per cent or more has only occurred three times.”
If January’s outcome aligns with the average of recent monthly prints, ANZ estimates the quarterly trimmed mean would more likely be around 0.7 per cent. Boyton stated that this approach had proven a reliable guide in recent quarters, including the December quarter, when October’s monthly CPI data accurately indicated a 0.9 per cent quarterly outcome.
The Reserve Bank of Australia (RBA) is closely monitoring trimmed mean inflation, amid concerns that inflation may persist above the target range for a longer period than initially anticipated.
