Inflation relief will be reflected in inflation indicator

Energy rebates paid out to all households are expected to impact the monthly inflation figures released this week.

The Australian Bureau of Statistics' consumer price index on Wednesday is expected to show a sharp decline in the inflation rate as the federal government's energy support takes effect and offers in some states fall in response to defaults.

The Reserve Bank of Australia will welcome signs of a cooling of inflation, but has already indicated that it plans to focus on underlying inflation pressures beyond temporary inflation relief.

The central bank continues to believe that underlying inflation is still too high and has tempered expectations of a near-term rate cut, suggesting that mortgage holders will wait until next year for repayment relief.

Stephen Wu, an economist at the Commonwealth Bank of Australia, said the electricity rebates would make the July consumer price index release, due on Wednesday, “difficult to interpret”.

The bank forecast a decline to 3.4 percent, a significant drop from 3.8 percent in July.

Another obstacle is travel prices, Wu said. Due to school holidays and trips to the northern hemisphere, travel movements are difficult to predict.

In addition, not all prices are included in the monthly consumer price index, which makes evaluation even more difficult.

“We will focus the detailed data more on price signals and not necessarily on where the headlines are coming from,” Wu said.

ANZ economists had also expected a sharp decline in the inflation rate to 3.3 percent in July.

In addition to the consumer price index, the ABS will also publish data that economists use to forecast gross domestic product.

Completion of construction is scheduled for Wednesday and capital expenditure for Thursday.

Consumer activity will also be visible later in the week when retail sales figures for July are released.

In June, sales rose by 0.5 percent, due to the large number of shoppers who took advantage of the end-of-year sales.

The story continues

Wall Street rallied on Friday as dovish comments from Federal Reserve Chairman Jerome Powell confirmed expectations that the central bank will cut its benchmark interest rate in September.

The Dow Jones Industrial Average rose 462.3 points or 1.14 percent to 41,175.08, the S&P 500 gained 63.97 points or 1.15 percent to 5,634.61 and the Nasdaq Composite rose 258.44 points or 1.47 percent to 17,877.79.

Australian futures rose 41 points or 0.51 percent to 7.129.

The S&P/ASX200 closed at 8,023.9 ​​on Friday, 3.1 points less than on Thursday but 0.7 percent more than in the week.

The broader All Ordinaries fell nine points or 0.11 percent to 8,249.1.