In a speech today, Michael Plumb, head of economic analysis at the RBA, said the central bank welcomes the introduction of a complete monthly CPI, noting that more frequent and comprehensive data will materially improve the timeliness of its inflation assessment.
However, Plumb cautioned that it will “take us some” time to understand the properties and seasonal patterns of the new monthly series. During the transition, the RBA will continue to “focus on the quarterly data”, particularly the quarterly trimmed mean measure, for forecasting and evaluating underlying inflationary pressures.
While maintaining its quarterly focus, the RBA has begun analyzing underlying inflation measures constructed from monthly data. Plumb said policymakers will assess potential biases, seasonal differences, responsiveness to economic conditions, and usefulness as a leading indicator.
The central bank intends to engage widely and communicate transparently before any shift in preferred measures in what he described as a gradual move toward a “post-quarterly CPI world.”
