The September quarter CPI will take centre stage and it is likely to be a strong result.
The general 15 to 20 per cent rise in household electricity and gas prices in the quarter will add around 0.5 percentage points to the headline CPI result. With a number of other government administered prices also rising from 1 July, i.e., within the September quarter, the CPI is expected to increase by as much as 1.3 per cent in the quarter which will take the annual inflation rate to 2.5 per cent. It must be noted that some forecasters are looking for a much lower increase of around 0.7 per cent, even allowing for the electricity price jump.
Of course, these price changes are not linked to a strong economy which means the RBA will, as it usually does, focus on underlying inflation which is a measure that tries to assess inflation pressures that are linked to the business cycle. Underlying inflation will be much lower than the headline result, probably around 0.7 per cent in the quarter for an annual rise of 2 per cent.
