The Reserve Bank of Australia (RBA) will reportedly soon get comprehensive monthly insight into inflation pressures, and it could mean it moves on key interest rate decisions earlier. The central bank defied expectations by holding the cash rate this month, with RBA Governor Michele Bullock noting issues around the current monthly inflation report were a key reason behind the decision.

The Australian Bureau of Statistics (ABS) releases monthly and quarterly inflation data. The quarterly CPI data is comprehensive and captures changes in prices for all goods and services. It is what the RBA and Treasury use to make forecasts, and the RBA is holding out for quarterly data before making another interest rate decision in August.

The monthly CPI data isn’t as comprehensive because it only includes up-to-date price information for 66 to 77 per cent of the CPI basket each month. Each month has different components in it, and the trimmed mean inflation isn’t calculated the same way as quarterly.

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From November 26, the Sydney Morning Herald reports the ABS will release a fully formed monthly inflation report. This will bring Australia in line with all but one OECD nation.

The May monthly CPI indicator showed headline inflation at 2.1 per cent and trimmed mean inflation at 2.4 per cent. In comparison, the March quarterly CPI indicator showed inflation at 2.4 per cent and trimmed mean inflation at 2.9 per cent, falling within the RBA’s 2 to 3 per cent target band.

The ABS will reportedly receive $156.7 million to compile data and rebuild its IT systems before moving to a full monthly inflation report. The extra funding will allow it to collect data every month on the expenditure classes not currently captured by the monthly figures, the Sydney Morning Herald reports.

It will continue to release the quarterly inflation report for at least the next 18 months.

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RBA waiting for inflation data to move on rates

Following the RBA’s decision this month, Bullock emphasised the board viewed the quarterly CPI as the most comprehensive inflation reading.

“This, of course, is our problem because we only get four readings a year,” she said.

“And it is very difficult, I have said this before — it is very difficult on four readings a year to get an idea of momentum of inflation.

“Other countries have full CPIs every month, and a much better idea about the momentum of inflation coming from that.