CBA Highlight Goods Disinflation Into Q1 CPI, Services Set To Be The Key Driver

Ahead of the Q1 CPI print CBA expect “the March quarter CPI to confirm that annual inflation peaked in the December quarter last year. The monthly CPI indicator suggests goods disinflation is occurring in Australia, as it is elsewhere. Services inflation is expected to be a key driver of the increase in prices. Other timely measures of price pressures, such as the PMIs and from the NAB business survey also point to a softening inflation impulse. Negative real household disposable income growth and negative wealth effects are weighing on consumer demand as the impact of the RBA’s 350 bps of hikes is flowing through the economy.”