PPI

Despite some sensationalist headlines in the papers the Producer Price Index figures released yesterday are unlikely to put too much upward pressure on the CPI and rates. The Q2 figures showed some upstream cost pressure for raw materials and components but final stage consumer goods inflation was a mere 0.4%. While there are some signs of latent inflation pressures in the PPI release and last week’s release of import and export prices, the outcomes do not seem high enough by themselves to push the RBA towards hiking rates. CPI figures however will be released tomorrow.