Core Inflation Rate is Expected to be Lower in the First Quarter as Reserve Bank of Australia Publishes Data on Wednesday
In the first three months of the year the core inflation in Australia have probably eased further but most economists say that it will not be sufficient to power a cut in the cash rate.
According to them, the focus of the Reserve Bank of Australia on the boosting the labor market and spurring business confidence and growth means, the financial agency will look through softer consumer price data as it is expected to be published in this week on Wednesday.
The inflation in the first quarter is broadly expected to be around 0.2 percent quarter on quarter. On a year on year basis it is expected to be 1.7 percent according to the economists surveyed by Bloomberg. In 2015, the rates were 0.4 percent and 1.7 percent respectively. The lower petrol prices most probably accounts for this difference.
According to the economists, the core inflation rate will probably come somewhat lower compared to the fourth quarter of 2015. The core inflation does not include volatile items and that comprise fuel too. Australian economist Alex Joiner wrote, "We forecast 0.5 per cent quarter-on-quarter for the core measure of inflation, which would see the annual measure decelerate to 1.9 per cent year-on-year."
However, the Bank of America Merril Lynch predicts it will go below the RBA's target bottom in the range of two to three percent for the first time since 2012.
The disinflationary pressure at times puts off consumer spending as well as investments in businesses an example is Europe and Japan, where it has led to extreme monetary easing.
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