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MNI BRIEF: RBA Ups Key Inflation Forecast As Energy Costs Soar

MNI (PERTH)
(MNI) Perth

The Reserve Bank of Australia lifted its trimmed mean inflation forecast to 6.5% for 2022 and warned energy prices will add "significantly" to inflation pressures over coming years, according to the Statement on Monetary Policy released on Friday. The increase in the Bank's preferred inflation estimate from the 6% forecast in August's statement follows the Bank's warning on Tuesday that headline inflation would peak "around" 8% later this year after it lifted rates 25bp to 2.85% - the seventh consecutive hike. (See MNI RBA WATCH: Hikes 25bp, To Miss Inflation Target Until 2025).

The RBA's also lifted its trimmed mean inflation estimate for June 2023 to 5.5% from 5% in August, and importantly, lifted its estimate for December 2024 from 3% in August's statement to 3.25% - a pace above the Bank's 2% to 3% inflation target.

The statement warned that energy prices are expected to add "significantly" to inflationary pressures over coming years. Retail prices for electricity and gas have increased by between 10% and 15% per cent in recent months and would be reflected in the December quarter CPI as state government subsidies wane.


Robert covers RBA and RBNZ policy and the economy for MNI in Australia.
Robert covers RBA and RBNZ policy and the economy for MNI in Australia.

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