The CPI for April rose to 6.8% y/y from 6.3%, higher than the 6.4% expected. It peaked at 8.4% in December 2022. The main driver of the increase was a fuel-related base effect, as the fuel excise was halved in April last year. Excluding volatile items, the CPI rose 6.5% down from 6.9%. Looking through special factors, inflation continues to move in the right direction at the start of Q2. The trend should assure the RBA that policy is working but also confirm their concerns re housing. The RBA’s Q2 2023 CPI forecast is 6.3%.

• The seasonally-adjusted CPI rose a moderate 0.3% m/m after 0.5% in March, only slightly higher than the series average. Excluding volatile items rose only 0.2% m/m after 0.6%. 3-month momentum in both series continues to ease.
• Housing remained one of the main contributors to annual inflation rising 8.9% y/y but down from March’s 9.5%. This moderation was driven by the new dwelling component which is being helped by lower building material costs. However, rents rose by 6.1% y/y up from 5.3%. The RBA expects them to rise further by close to 10%. (See RBA: Supply-Side Reforms Needed To Increase Housing & Reduce Rents)
• Food price inflation remains high at 7.9% but down from 8.1% in March.

Source: MNI - Market News/ABS