Aus macro/inflation

The Australian monthly inflation print is out. 4.3% YoY, better than expected (4.4%) and trending in the right direction (prior was 4.9%).

It was “the smallest annual increase since January 2022”, in the cheerfully factually accurate accompanying commentary from Michelle Marquardt, ABS head of prices statistics.

The intra-day market reaction, however, is suggestive of a “progress is too slow” verdict, based on macro market movements.

Essentially, tradeables inflation is behaving, due to global supply chains healing, however non-tradeables (i.e. domestic) inflation does look quite stubborn.

Still, nothing here to change our over-arching view; inflation will continue to come down, rates can then follow inflation lower, and that the risk of an overshoot is higher for countries like Australia.

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