Senate Economics Legislation Committee, , 3:58:15 to 3:59:59
Discussion on the RBA's focus on trimmed mean inflation and how Australia's economic position compares globally.
Topics: Agricultural productivity, Employment
Speakers: Michele Bullock, Dr Sarah Hunter, Senator Dave Sharma
Thanks, uh Chair for the call. The um measure of inflation, the RBA's preferred measure is trimmed mean or core inflation as opposed to headline, is that right?
Yes, that is correct. Um it's let me let me take a step back. Our target is headline. But we use uh we focus a lot on trim mean, this underlying uh measure because we think that it abstracts from some quite um volatile components of the CPI, which can sort of abstract from what's going on uh really in terms of the underlying inflation rate. So it's not our target, our target is headline, but over time you would expect headline and and underlying to move together, but it just abstracts from the uh volatility month to month.
Okay. So when was trimmed mean inflation last within the RBA's target band?
Uh 2025. Can I back in briefly?
I think we'd have to just check to get the precise data. It has been uh some time, Senator, you're right. Uh but uh it's cutting back into that. Is it come back into that in 2025? Uh but it's been some time since it's been there sustainably.
Yeah, I thought headline inflation dipped into the target band in 2025.
Uh headline certainly give headline went below the target band, in fact, at one point.
Uh trim mean inflation did come inside the target band at sort of middle of last year. It then rose back out um towards the end of last year, as the governor was discussing earlier.
Okay.