Australian GDP Chain Price Index (Q2 QQ) -0.6% (Prev. 0.8%)

Australian GDP Chain Price Index (Q2 QQ) -0.6% (Prev. 0.8%)

The chain price index is the GDP deflator, so a negative quarterly print means economy-wide prices fell, which in Australia's case has historically tracked the export side rather than domestic demand: swings in bulk commodity prices and the terms of trade have tended to drive this series, and swings of this size have usually coincided with a pullback in iron ore and coal prices rather than domestic deflation. The distinction worth drawing is between a deflator fall driven by export prices, which weighs on nominal GDP, national income and mining tax receipts while leaving domestic inflation largely intact, and one driven by domestic prices, which would feed directly into the trimmed mean debate at the RBA. Past episodes of terms-of-trade-driven deflator weakness have tended to weaken AUD through the terms of trade channel only where the commodity move persisted, and to leave the policy rate path alone since the Bank targets the CPI rather than the deflator. The follow-ons are the income and expenditure detail in the full national accounts release, the terms of trade line within it, and any RBA commentary distinguishing nominal income weakness from price pressure.