Updated True Core Inflation rates

RESEARCH Content

Report demonstrates that

• Rental inflation has an important impact on the AUD, CAD, UK, US, SEK and NOK inflation baskets.

• Whilst there is concern about the “stickiness” of inflation, a true core inflation calculation shows that, excluding food, energy and rental inflation, the underlying trend remains disinflationary

• The exception is Australia, but here the absolute level is already very low at 1.5%yoy

This will unlikely have any impact on Central Banks monetary policy. Indeed, the stickiness and important contribution of rental inflation in some countries could act as an important headwind to core inflation in these countries and keep Central banks from cutting. These are all countries where real private sector lending is very poor by recent historical standards – tight policy would keep these credit trends weak and act as a continued disinflationary force and a headwind for GDP growth.