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Raw material inflation surging but “nothing to see” yet as far as central banks are concerned
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Australian inflation numbers were released this week. The RBA’s preferred measure (the trimmed mean) rose just 0.3% over the quarter or 1.1y% over the year, well below the target range or 2-3%, on average, over time. Key contributors to inflationary pressure were Transport +3.2% (assisted by automotive fuel +8.7%) and Health +2.0%, while there were falls in the Furnishings -0.2% and Recreation -0.2%.
The ABS noted the impact of the Federal Government’s Homebuilder grant and similar grants by the WA and Tasmanian state governments, emphasising that without these grants, the price of new dwellings would have risen (instead of falling 0.1%), reflecting increases in materials and labour prices due to strong demand