FXStreet (Mumbai) - Australia will release the Q4 Consumer Price Index (CPI) data on Wednesday at 00.30 GMT. CPI is expected to have fallen 0.3 per cent quarter on quarter in Q4, down from 0.5 per cent rise in inflation seen in the earlier quarter. Year on year, CPI can be expected to have risen slightly to 1.6 per cent in Q4 compared to 1.5 per cent increase seen previously. According to Westpac, the December quarter has seen subdued prices. Segments such as holiday travel (domestic & international), tobacco (residual due to timing of the September re-indexing of the excise) and house purchases helped to boost prices and contributed significantly to the overall CPI. However, the impact was offset by declining fuel prices which subtracted 0.2 ppts from headline CPI. Westpac expects core inflation to increase by 0.6% in the December quarter, pushing the annual core CPI to the lower bottom of RBA’s inflation target band. The six month annualized inflation is likely to grow at a slower 1¾ per cent pace. Besides re-indexing of tobacco excise, rise in holiday travel costs and consistent gains in the housing sector there is little inflation push from other segments. This has led Westpac project a downside risk to their core inflation forecasts. However, they feel that onset of ‘disinflationary impulse’ is unlikely. Traded prices have been noted to have given that low fuel prices are offsetting any upward pressure created by the weak Australian dollar. Traded goods and services prices (excluding fruit, vegetables, fuel & tobacco) are likely to drop around a ⅓ per cent in the Dec quarter. Traded goods & services continue to fail to add to the inflationary pressure. The RBA left its cash rate unchanged at 2 per cent in December and declared its intention to continue with its accommodative policy. It opined that monetary policy is required to be loose at this juncture when inflation in Australia remains low and the economy has some spare capacity. While keeping rates steady, the central bank reiterated that low inflation gave them scope to ease further if a further rate cut was required to support growth. For more information, read our latest forex news.