By Craig James 

A raft of inflation (price) measures are expected in Australia in the coming week with the figures on consumer prices of most interest. Overseas, the focus is on another bumper schedule of economic data releases in the US with economic growth data on Friday.

The week kicks off in Australia on Monday, with the release of the latest State of the States report from CommSec. The report highlights the relative economic performances of state and territory economies.

Also on Tuesday, Roy Morgan and ANZ will release the weekly consumer sentiment survey. Aussie consumers are feeling OK at present – not irrationally optimistic nor pessimistic.

On Wednesday, the Australian Bureau of Statistics (ABS) releases the Consumer Price Index (CPI) for the September quarter.

We believe that price pressures are generally contained. The “headline” CPI probably rose 0.4% in the quarter and 1.0% over the year, replicating the June quarter results. Petrol prices fell by between 2-3% in the quarter, keeping inflation at modest levels.

Clearly, the “headline” CPI can get affected by volatile elements like petrol. The “underlying” price measures attempt to dig a little deeper to get a better sense of price pressures. We expect that “underlying” prices rose by 0.5% in the quarter and 1.7% over the year.

Results in line with our forecasts don’t provide the “smoking gun” needed to justify another rate cut. But if the underlying estimate of inflation lifts by less than 0.4%, then another rate cut will be on the agenda at the November 1 Reserve Bank Board meeting.

The question for Reserve Bank Board members is whether there is value in cutting rates again.

On Thursday, the ABS releases data on export and import prices. And on Friday, the producer price indexes are issued. In both cases, results are pivotally affected by prices of oil, iron ore and coal as well as the Australian dollar.

Other events of note include a speech by Sarv Girn, Chief Information Officer at the Reserve Bank on Wednesday. And data on new home sales is released on Friday together with the complete national accounts data for the 2015/16 year.

Overseas: US economic growth and “flash” manufacturing to dominate attention

Another bumper week of US economic events lies ahead including the first estimate of economic growth for the recently-completed September quarter.

The week kicks off on Monday in the US, with the release of National Activity Gauge. In addition, Markit releases the “flash” readings (or early estimates) of manufacturing activity is the US, Europe and Japan.

On Tuesday, the influential Richmond Federal Reserve survey results are issued with the usual weekly data on US chain store sales. In addition, both the Federal Housing Finance Agency and CaseShiller release estimates of home prices for August. CaseShiller estimate that home prices are up 5.0% on a year ago, while FHFA believe prices are up closer to 5.8%.

Also on Tuesday, the Conference Board issues its October estimates of consumer confidence. The index stands at 104.1, signifying that there are more optimists than pessimists.

On Wednesday, there are three US indicators for release – new home sales, the “flash” estimate of services sector activity and advance data on the trade balance – exports and imports. In addition, the usual weekly data on housing finance is issued.

On Thursday, there are another three US economic indicators on the agenda – durable goods orders (proxy for business investment), pending home sales and the Kansas City Federal Reserve survey. In addition, the usual week data on claims for unemployment insurance (jobless claims) is issued.

And on Friday, the first (or ‘advance’) estimate of economic growth for the September quarter is released. After a soft June quarter when the economy grew at just a 1.4% annual pace, economists expect that activity expanded at a healthier 2.5% annual rate in the September quarter.

The quarterly data on employment costs is also released on Friday – important for gauging future inflation and thus the implications for interest rates. The University of Michigan releases final estimates of consumer sentiment for October.

Share market, interest rates, currencies and commodities 

The US earnings season remains in focus for investors in the coming week. But the US elections will also be top of mind given that there is just over two weeks to go to the November 8 poll.

Commodity prices are also very much in vogue as we highlighted a few weeks ago. Coal, iron ore and oil prices have been lifting, but agricultural prices aren’t being left behind.

Sugar prices have lifted by 51% since the start of 2016 with cotton up 13% and beef up 4%.