Benign inflation setting in
A quiet couple of days all told, with the Australia Day public holiday taking out Monday from the economic calendar this week, and nothing too exciting of domestic note due until Wednesday morning, when the inflation figures are due to be released for the fourth quarter.
Although the Reserve Bank has indicated zero appetite for seeing a lower cash rate, financial markets became even more dovish last week, with a rate cut now all but priced in by June 2020.
The inflation figures will be a closely-watched piece of this puzzle, not least because underlying inflation has bumbled along either at or below the bottom end of the target 2 to 3 per cent range since the end of 2015.
The market median forecast is for headline consumer price inflation (CPI) of just 0.4 per cent for the fourth quarter, but forecasts have been consistently over-egged for a couple of years now, and there's every chance the result could be softer still.
Westpac thinks core inflation will print at just 0.3 per cent, bringing the annual pace even further below the target range (and the two-quarter annualised pace down to near stall speed just 1.3 per cent).
There's apparently little prospect of this changing much any time soon.
Certainly there will be little contribution from rental price growth, with rental inflation tracking at close to two-decade lows.
There's been a bit of a bounce in tradables inflation, but if tobacco price hikes are excluded inflationary pressures are more benign still.
Tobacco will again be the main contributor in Q4, as it is all but mandated to be, while food, fruit, and veg will add a little inflation on drought-related shortages.
But outside of that it's hard to see any other significant positive contributions at all.
What's more fuel price inflation is due to ease in the figures for the first quarter of 2019, and housing cost inflation will at some point presumably turn flat to negative.
Missing: one inflation target!
Missing: one inflation target!
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Later in the week key figures will be released on private sector credit, while brokers and bankers will await the final Royal Commission recommendations with bated breath as the month draws to a close.
