Producer Price Index

The Producer Price Index (PPI) for Q3 came in much higher than expected, rising 1.3% for the quarter, a big jump from the 0.5% expectation. Final Commodities were the big mover, up 1.3% from a forecast 0.5% and this insured that utilities rose by 8.9%. Prices for consumer goods were up 1.8%, with domestic goods rising 2.1% and imports up 0.8%. Although the PPI does have a mixed relationship with the CPI, the upside risks for tomorrows figure have materialised as prices for electricity, gas and water are up 8.9%, and this will partially move through too consumer prices. As stated yesterday, the PPI doesn’t usually have to much influence on the market, with the futures ‘only’ pricing a further 18% (56% chance) of a hike Nov 2.

The RBA Governor Glenn Stevens spoke yesterday, making some remarks about the international controversy about the intervention of currency markets. He stated that the imbalances would not affect global growth, however would shift growth from one part of the world to the other. Stevens stated nothing about the near term outlook of the Australian Economy with the board meeting just one week away.