Your 10-second guide to today's Australian inflation report

Australia’s March quarter consumer price inflation report (CPI) is about to be released.

Arriving just four times a year, it’s arguably the most important data release on the Australian economic calendar, especially when it come to the outlook for monetary policy settings from the Reserve Bank of Australia's (RBA).

Underlying inflation has remained below the bottom of the RBA's 2-3% medium term target for three consecutive years, helping to explain why Australia's cash rate sits at just 1.5%, the lowest level on record.

Economists expect that trend will continue today with most forecasting that underlying inflation will actually move further away, rather than closer to, the RBA’s target level.

That means today’s CPI report will be a blockbuster event given financial markets continue to price in at least one 25 basis point rate cut from the RBA by the end of this year.

Here’s the state of play.

Image: BI

• The CPI report is based off price movements in a set basket of goods and services commonly purchased by metropolitan households.

• Individual items fall into 11 broader categories, and are weighted based on estimated expenditure by households.

• In the December quarter, headline inflation -- including all price movements in the ABS basket -- rose by 0.5%, leaving the increase on a year earlier at 1.8%.

• Over the year, tradable prices rose by 0.6%, four-times slower than the 2.4% increase in non-tradable items over the same period.

• Tradable prices are influenced by offshore factors. Non-tradable prices are largely determined by domestic forces. The latter category accounts for around 60% of the weighting in Australia's CPI basket.

• Underlying inflation -- of more importance to the outlook for monetary policy settings from the RBA -- rose by a slower 0.4% for the quarter. Over the year it increased by 1.75%, down marginally on the pace seen in the year to September.

• The latter measure, also known as core inflation, is the average of the trimmed mean and weighted median inflation measures released by the ABS. It removes volatile price movements seen during the quarter, providing a better guide as to underlying inflation trends. It's also seasonally adjusted, unlike the headline CPI reading.

• Today, economists expect both headline and underlying inflation to move further away from the RBA's target range.

• The median economist forecast for headline inflation looks a quarterly increase of just 0.2%, seeing the year-ended rate slow to 1.5%. Individual forecasts for the annual rate range from 1.3% to 2%.

• For underlying inflation, the average of the trimmed mean and weighted median forecasts looks for a quarterly rise of 0.4%. Such an outcome will see the annual rate decelerate from 1.75% to 1.65%.

• In forecasts released in early February, the RBA saw underlying inflation growing by 1.75% in the year to June before accelerating to 2% by the end of December.

• The RBA has stated that a lack of progress in returning underlying inflation to its target, along with a sustained increase in Australia's unemployment rate, are two outcomes that could warrant further monetary policy easing in the period ahead.

• Financial markets are fully priced for the RBA to cut Australia's cash rate by 25 basis points by October this year. Another 25 basis point rate cut, taking the cash rate to just 1%, is also close to fully priced by the middle of next year.

Australia's March quarter CPI report will be released at 11.30am AEST.

Business Insider will have all of the facts, figures and potential implications for interest rates as soon as it hits the screens.