Inflation gauge plunges
There was some brighter inflation news in the US over the past week, giving a timely boost to stock markets.
Today, we got an Australia update from the Melbourne Institute, which saw its monthly inflation gauge plummeting from 3.7 per cent to just 3.05 per cent over the year to May.
Putting the obvious base effect issues to one side clearly it won't escape your notice that 3.05 per cent is very close indeed to the 2 to 3 per cent inflation target, suggesting little need for further policy tightening as the unemployment rate continues to rise.
That's also the lowest annual inflation level on the MI gauge in some 28 months, and provides decent evidence that contractionary policy settings are working as intended.
The trimmed mean reading was 0.28 per cent for the month, and also slowed to 3.2 per cent over the year.
Dr. Alex Joiner of IFM noted that the quarterly inflation pulse is now low, while Justin Fabo of Antipodean Macro noted that the share of items rising in the inflation back is also now relatively low.
Australia's minmum wage increase was lower than economists expected this year, at a 3¾ per cent increase from 1 July (markets had expected 4 per cent)
The increase will be awarded to 2.6 million workers from 1 July, but is considerably lower than the 5¾ per cent awarded last year.
The minimum wage thus increases from $23.23 to $24.10 per hour, well up by 27.3 per cent from $18.93 in 2018.
The crude oil price has plunged from a high of around $87 last month to $74 after the latest OPEC meeting, and that certainly won't hurt the global inflation dynamics either!
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