At first glance, data released this week should give the RBA greater confidence that it has brought price pressures under control. Both headline and underlying inflation remained within the Bank's 2-3% target range in January, aided by a sharp slowdown in shelter inflation. Additionally, the economy seems to have remained in a soft patch last quarter, with private investment falling outright. However, the picture is not as clear-cut as it seems. The monthly CPI print may be understating inflationary pressures, given that prices for most services were not surveyed last month. And while weak business investment is crimping demand, it is also hindering the economy's supply capacity.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services