Tonight’s Federal budget will be completely forgotten by markets by the morning as all eyes watch for this month’s super important inflation print.
The most important number tomorrow will be the trimmed mean compared to the same period last year. It’s the number we’ve been watching but it shows inflation velocity and what trajectory we are heading into for next year.
We know inflation is bad, but is it getting better or worse? That’s the game.
Markets are expecting the quarterly trimmed mean to rise from 4.9% to 5.6%. Any number with a 4 in front of it will be welcomed by the RBA and will give them confidence in their 25 basis points stance vs market pressure for 50 basis points.
It’s not all about this number, but this number carries a lot of weight going into the end of the year.
Bottom line: Numbers can bounce around from month to month and quarter to quarter. It’s the trend that matters. We think the trimmed mean is showing signs that inflation expectations are gradually easing and Australia is a lot better placed relative to global peers.
The RBA has so far read the situation perfectly, our housing market is holding up and spending is moderating but without panic or risk to jobs just yet. It’s a fine balancing act.
Market insights and analysis from Peter Esho, co-founder at Wealthi, Sydney-based property investment company.
