Q3 inflation prints very low, but revises very high! RBA likely to cut as once-off adjustment to neutral

Today's inflation data suggests we are very likely to get a rate cut in November of 25 basis points. But the detail is complex. Whether any more come depend on other activity data: crucially the unemployment and GDP data. Aside from the lowest trimmed mean result (0.3%) since Q3 in 1997, and the exact congruence with the weighted-median result (0.3%), what was very surprising about today's release was another big revision to Q2. In short, the average of the trimmed mean and weighted median inflation estimates was revised back up from 0.6% to an unacceptable 0.8%. Recall this followed huge media, economist and RBA hoopla about the downward revisions in Q2 from +0.9% to +0.6%. Now we are at +0.8%! And that follows a revised 0.8% core inflation estimate in Q1. Ordinarily, this means rate hikes, and would totally eliminate cuts. One curiosity is that this will now beg the question as to whether, in fact, it is the Q3 number that is anomalous/rogue, contextualised against the following sequence of inflation results in Australia: +0.5% in Q2 2010, +0.5% in Q3 2010, +0.6% in Q4 2010, +0.8% in Q1 2011, +0.8% in Q2 2011, and now just +0.3% in Q3 2011. My guess is that the RBA will exercise the option of doing nothing for as long as it possibly can. Thinking about this a little further, I guess there is also the possibility they do not cut in November, and just sit on their hands. The fact is 25bps here or there is not going to make a world of difference to anything. Interestingly, the Q3 result is yet another example of the very close correlation between Aussie and NZ CPI.