Both headline and core inflation in Australia show inflationary pressures picking up again, with the introduction of the carbon tax on Jul. 1 affecting consumer prices last quarter. While the RBA has been suggesting more room for further cuts is possible, with main worries on China and a global slowdown, the data is expected to ease dovish tone for now.
As Adam Button, Analyst at Forexlive, notes: "There was talk that economists may have had a hard time with effects from the carbon tax but the internal numbers look genuinely high including a 1.4% rise in clothing, 1.3% in health and 1.4% in financial services." Pricing of an RBA rate cut has moved sharply lower following stronger-than-expected CPI numbers, now around 60%.