The bank’s governor said as much when she spoke to a room full of economists on Monday night, warning that a 0.9 per cent quarterly core inflation figure would be a “material miss” compared to the RBA’s forecasts.<\/p>\n
The “trimmed mean” for the September quarter, which strips out the most volatile price moves up and down, came in at 1 per cent. The headline number was 1.3 per cent.<\/p>\n
Inflation surges to 3.2pc in September quarter<\/a><\/p>\n Inflation data has came in much hotter than economists were expecting with annual inflation surging to 3.2 per cent in the September quarter, up from 2.1pc in June.<\/p>\n While recently released jobs data showing a surprise rise in unemployment to 4.5 per cent lent weight to the case for a November rate cut, the RBA has consistently downplayed monthly moves as volatile.<\/p>\n The same isn’t true for the quarterly inflation figures, where the bank has been concerned for some time that the downward trend in inflation might be slowing, or even reversing.<\/p>\n As a central bank that still primarily targets 2-3 per cent inflation, despite having a dual mandate to set policy in order to promote “full employment”, the RBA simply cannot disregard this inflation shock and cut rates next Tuesday.<\/p>\n Follow live updates on the share market and currency reaction to the inflation figures plus the day’s business news and analysis at the ABC markets blog.<\/a><\/p>\n Even more devils in the detail<\/p>\n While the headline shock is more than enough to stop the RBA in its tracks, the detail of which prices are rising most is equally concerning.<\/p>\n Yes, the end of electricity rebates was the single biggest driver of surging inflation, as was widely anticipated.<\/p>\n But, even excluding the effects of expiring rebates, electricity costs would have been up 5.9 per cent over the past year anyway.<\/p>\n And resurgent price pressures extended far beyond power bills.<\/p>\n Recreation and culture costs jumped 1.9 per cent in the quarter, driven by a 2.9 per cent surge in holiday travel and accommodation.<\/p>\n Recreation and culture costs jumped 1.9 per cent in the quarter. (AAP: Bianca De Marchi)<\/p>\n Yes, school holidays were a seasonal factor pushing that up, but struggling households don’t generally spend big taking their kids away, while those empty nesters without kids (here’s looking at you Boomers) pushed up international travel costs with their European summer pilgrimages.<\/p>\n Driving the 3.2 per cent annual rate of inflation was a 3.3 per cent rise in the cost of eating out, another sign that enough households have enough money to spare to allow businesses to push up prices.<\/p>\n<\/p>\n