Inflation takes centre stage in Australia this Wednesday with the new monthly indicator to be released by the Australian Bureau of Statistics which will mesh with the more comprehensive quarterly Consumer Price Index.
The ABS will release the monthly inflation data for July and August and under a trial of the indicator, inflation was running at an annual 6.8% in June (the June quarter showed a rise of 6.1% overall).
The June quarter CPI was up 1.8% from three months to March.
In an update earlier this month the ABS said that “In addition to the headline figures, the media release will include data for expenditure groups and some selected expenditure classes.”
“The first full monthly CPI indicator publication, including data from 2018 up to and including September 2022, will be released on 26 October 2022 alongside the September quarter CPI publication. The quarterly CPI will continue to be Australia’s key measure of inflation,” the ABS explained.
Economists think the indicators for July and then August will show inflation rose 7.8% and 7.1% respectively, according to the AMP’s Shane Oliver.
He wrote at the weekend that “cutting through the noise will be consistent with expectations for a further rise in inflation into year end.”
September will see the fuel excise cut from earlier in the year restored with a further indexation rise added, meaning a 24.5 cents per litre rise in petrol prices this week (September 29), which will keep inflation above 7% heading towards the end of the year.
The data will in turn trigger a rise speculation about the next rate rise from the RBA tomorrow week. Given all the speculation from the US and Europe (especially the UK) about inflation and interest rate rises, volatility in local markets will step up this week.
On top of the inflation data the ABS also releases August retail sales figures on Wednesday which will be watched closely by the RBA to see if demand is slowing. Dr Oliver sees a small rise of 0.1% (after the 1.3% jump in July) which in real terms will be falling.
Job vacancy figures for the three months on Thursday “will show that vacancies remain very strong but that their pace of growth is slowing,’ according to Dr Oliver. Friday sees private credit data for August from the RBA which will show weakening home lending.
Friday also sees four big banks balance their full years (NAB, ANZ, Westpac), half year (Macquarie) and a group of smaller companies like Orica, CSR, James Hardie. Dozens of mining companies also balance their first or third quarters as well and release reports next month.
In the US with markets under pressure some important data the third and final estimate of June quarter economic growth will be release late in the week. The second estimate a month ago showed a small improvement with a contraction of 0.6%, better than the first estimate of a 0.9%.
Moody’s economists say the third estimate this week will show a reversal of the earlier fall with forecasts for a contraction of 1.5% with a 1.2% contraction from the March quarter.
This week also sees 13 separate speeches from Fed members – some will be making two speeches in coming days, so the Fed view will be firmly front of mind for markets by this Friday.
As well there will be August data for US durable goods orders, consumer confidence, home prices (July) and new home sales (all due Tuesday).
Friday sees the release of the Fed’s favourite statistics – personal consumption expenditure, including the PCE price index.
Dr Oliver says we can expect sluggish growth in personal spending for August on Friday with the personal consumption expenditure data forecast to show a rise in core inflation to an annual 4.8% rate but remain well down from its February high of 5.3%
Eurozone data is likely to show a further fall in economic confidence (Thursday) and flat unemployment at 6.6% but another rise in CPI inflation to an annual rate of 9.7% with core inflation rising to an annual 4.9% (both Friday).
In the UK reaction to Friday’s economic statement, the falling value of the pound and the weakening economy will dominate events in Britain.
Counting of votes in Italy’s election on Sunday continues and is likely to see a right-wing victory.
Japan’s unemployment rate is expected to have fallen to 2.5% in August with industrial production showing another small gain (both due Friday).
The value of the yen and the question of whether the Bank of Japan will again intervene to support the currency will keep forex markets nervy and on a short ;eash this week.
Chinese business conditions PMIs for September on Friday are likely to have remained subdued.
Elsewhere in Asia, central banks in India and Thailand are expected to lift interest rates this week.
