Weekly Market Recap
Time for a trim
Week in review
- Chinese economic growth rate slows to 4.9% y/y in 3Q
- RBA policy October meeting minutes still dovish
- U.S. industrial production falls 1.3% m/m for September
- Australia CPI inflation rate
- U.S. 3Q real GDP growth
- Australia private sector credit growth
Thought of the week
As Victorians are now able to head out for a trim this week, the degree to which higher inflation impacts their spending habits will matter for the growth outlook. However, the breadth of inflation pressures is more important than the overall rate of inflation. Both the trimmed mean rate of inflation or the rate excluding volatile items are ways of considering the extent of inflation in the economy. The trimmed mean, which is designed to adjust for temporary factors such as supply disruptions, has experienced a more modest rise than other gauges of inflation. Removing the distorting effects of those goods which have seen the largest price rises and falls from one quarter to the next provides a better indication of the underlying burden of inflation and is why it’s the one of the RBA’s preferred indicators. What this doesn’t capture is the real cost of living, how consumers may react and the squeeze on household spending or wage expectations.
Watch the breadth of inflation not overall rise
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