Inflation softer
Analysts had expected a bit of a shocker for the inflation figures today, and auto fuel prices did surge by almost 15 per cent in the month of August (following a 7½ per cent leap in July), taking headline inflation up to 4 per cent.
However, the underlying data was materially softer than feared, seeing the Aussie dollar drop from around 70 US cents to below 69.6 cents after the release, before stabilising.
The 3-year government bond yield also declined to 4.9 per cent, having been as high as 5.1 per cent over this past week.
The trimmed mean inflation figure - which strips out some of the noise - was only 0.2 per cent in August 2026, which was softer than market expectations (though to be fair Westpac Economics pretty much nailed it).
To two decimal places, trimmed mean inflation was 0.24 per cent in August.
Source: ABS
Markets moved quickly to price out a rate hike from November, now trading at around only a 1 in 4 possibility.
Housing was still the main contributor to inflation over the year, with consumer prices rising 5.7 per cent (driven by new dwelling prices, up 5.4 per cent).
New dwelling costs have now increased by 48 per cent since April 2021.
Overall, the Treasurer and the central bank would have to be pretty pleased with these numbers, having taken plenty of criticism of late.
A lot now seemingly rides on the uncertain outlook for oil prices, following two face-ripping months for the cost of fuel.
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