Over the past six months, Australia’s inflation has shown a notable decline, bringing it within the Reserve Bank of Australia’s (RBA) target range of 2–3%.
Today we get the monthly Consumer Price Index (CPI) indicator, for January 2025. The monthly number does not carry the weight that the quarterly does (more on this below).
The downward trend in inflation has been influenced by various factors, including government rebates like the Commonwealth Energy Bill Relief Fund, which have helped reduce electricity costs. In response to the easing inflationary pressures, the RBA cut the cash rate by 0.25 percentage points to 4.10% earlier this month, the first rate cut since November 2020.
While headline inflation has moderated, underlying measures, such as the Trimmed Mean Inflation, remain above the target range, indicating persistent price pressures in certain sectors. The Trimmed Mean was recorded at 3.2% in December 2024.
Today we get the January readings, the headline rate is expected to have risen from December.
***
You’ll note that Federal Reserve Bank of Dallas President Lorie Logan is listed as speaking. I don’t think is correct. I had her scheduled to speak much earlier:
***
Australian Monthly CPI Data
- The monthly CPI indicator was introduced in October 2022 as a complementary measure to the long-established quarterly CPI.
- It provides a more frequent snapshot of inflation trends in Australia by tracking price movements across selected goods and services categories each month.
- However, the monthly CPI series has limitations:
- It covers about 62–70% of the items in the quarterly CPI basket, meaning some categories are excluded, such as services with less frequent price changes (e.g., education and health).
- It is subject to revisions, especially as more data becomes available or adjustments are made to seasonal factors.
- Seasonal adjustment processes can create some volatility and reduce interpretability in the short term.
