Daily Commentary BY THE CURVE TEAM –

Despite domestic figures holding up, concerns for the outlook remain

14th of January, 2019

Data continued to flow into the weekend both here and offshore. While domestic retail sales figures held up in the face of falling house prices, there are still concerns for the outlook. Meanwhile, the latest US CPI data is sure to keep the monetary policy outlook debate alive.

Friday’s local data release showed Australian retail sales grew by 0.4% in November, the largest monthly percentage increase since April last year. Black Friday and Cyber Monday sales appeared to have pulled forward some Christmas sales.

As a result, it’s likely that retail sales in December might look a lot more bleak with the more recent online sales data supporting the pull forward effect of the November sales.

Offshore, we saw US headline CPI drop 0.1% over December in line with expectations. The fall was driven by a decline in energy prices, particularly oil.

Core inflation picked up 0.2% over the month, enough to keep the 12-month change at 2.2%. Moreover, average weekly earnings picked up 0.5% over December. While recent US data has been a bit of a mixed bag, this data shines a positive light on the outlook, giving the Fed more reason to continue their rate hike campaign.

Neyavan Suthaharan

Client Services Officer