ANZ’s economics team has circulated their “Australian Macro Weekly” note, which says something interesting.

It looks back at Wednesday’s inflation data (which came in much higher than expected), and the team says we ought to be aware that there was a bit of “noise” in the ‘trimmed mean’ measure of inflation, which may be giving a false sense of how strong inflation really is.

“In the wake of the CPI [result], the hurdle for any [interest rate] easing [from the Reserve Bank] this year is now very high
and would likely require a further move higher in the unemployment rate (with an unfriendly
mix of details) and a weak Q3 GDP.

“The most likely path for interest rates remains a final
25 basis point easing in the first half of 2026, albeit now with risk that the final rate cut we expect in
February ends up occurring later (possibly May after the next two quarterly CPIs) or not at
all.

“We are not yet inclined to remove that final easing from our forecasts, given:

1) The recent
drift higher in the unemployment rate

2) The tendency (over some recent years) for Q3
trimmed mean prints to come in higher than Q2 and Q4 outcomes, and

3) What looks like a
number of one-off factors coming together in the quarter to push the trimmed mean higher.

“Indeed, if property rates & charges, tobacco and electricity prices had all risen 2.5% q/q in
original terms and petrol prices hadn’t changed, then trimmed mean would have printed
about 0.14ppt lower.

“We focus on these items because they are either heavily influenced by
government decisions or particularly volatile; but our broader point is that the trimmed mean
inflation measure, like all data, can contain some noise alongside the underlying signal.

“We expect the RBA to express some concern about market sector services inflation next
week, although the modest easing in the labour market over the past year does suggest a little downward
pressure is still likely over the coming quarters.

“That’s also consistent with what price and cost
measures from business surveys point to on inflation more broadly.