Interestingly, the other measure of underlying inflation, the weighted median, came in below consensus at 1.4%/qtr (vs 1.5% consensus). And economists and market participants have generally focused more on underlying inflation (or core inflation) rather than headline inflation when assessing the outlook for monetary policy in Australia. And wage negotiations generally take place with the rate of headline inflation as a key input rather than the underlying rate. The headline rate of inflation in Australia will peak at a higher level than the underlying rate (we expect headline inflation to peak ~7¾% and core inflation at 6½%). But they are likely to leave the peak in headline inflation unchanged at 7¾% (note that the Commonwealth Budget last night forecast headline inflation to peak at 7¾% in Q4 22).

Source: Stuff October 26, 2022 05:39 UTC