CPI could rise to 5.9% by December, the MPS forecasts.
The Reserve Bank of Australia has significantly increased its inflation forecasts for 2022, but still sees prices falling back sharply by 2024, see: MNI STATE OF PLAY: RBA Could Take Rates To 2.5%, Says Lowe.
The RBA’s released its latest Monetary Policy Statement on Friday forecasting CPI inflation to rise to 5.9% by December before falling back to 2.9% by June 2024. CPI came in at 5.1% in the first quarter of this year. On trimmed mean or underlying inflation, which is the RBA’s preferred measure, the forecast is for 4.6% by December and down to 2.9% by June 2024.
Underlying inflation is now at 3.7%, higher than the RBA’s target band of 2% to 3% for the first time in more than ten years. The sharp rise in inflation prompted the RBA to raise interest rates for the first time since 2010 this week, 25 basis points to 0.35%.