MNI DATA PREVIEW: Australia Q1 CPI Y/Y Seen Below RBA Band

By Sophia Rodrigues

     SYDNEY (MNI) - Economists expect Australia's consumer price index inflation

to slow slightly in the first quarter, keeping inflation below the Reserve

Bank's target band for the fourth quarter in a row and pointing to few

indications of inflationary pressures in the economy.

     The MNI median forecast is for headline CPI to rise 0.5% q/q in Q1,

compared with +0.6% in Q4, and is expected to keep y/y CPI at +1.9% for the

second straight quarter. Underlying CPI, which is roughly taken as the average

of trimmed mean and weighted median measures -- is also expected to rise 0.5%

q/q and 1.9% y/y.

     The data will be published by the Australian Bureau of Statistics at 1130

hours local time Tuesday (0130 hours GMT).

     The main contributors to Q1 CPI are expected to be seasonal increases in

education and health, and higher energy prices. Partly offsetting this are

continued drag from clothing and footwear, communication and recreation. The

food group is expected to make no contribution due mainly to fall in fruit and

vegetable prices.

     For the previous five quarters economists have over-estimated CPI, so the

bias is for another downside surprise, although it is unclear how much

forecasters have already adjusted for the previous underperformance.

     On the other hand, there remains a risk of an upside surprise given New

Zealand's Q1 CPI came slightly above expectation. Economists at National

Australia Bank say their modelling points to tradables inflation of around -0.4%

q/q, but they see potential upside risk given rising global inflationary

pressures and because New Zealand tradables CPI declined just 0.1% q/q.

     Below are individual forecasts for the first quarter CPI data. 

                     All        All

                  Groups     Groups    Trimmed       Underlying       Underlying

                     CPI        CPI       Mean       Inflation*       Inflation*

--------------------------------------------------------------------------------

                     Q/Q        Y/Y        Q/Q              Q/Q              Y/Y

                % Change   % Change   % Change         % Change         % Change

                      Q1         Q1         Q1               Q1               Q1

Median              +0.5       +1.0       +0.5             +0.5             +1.9

High                +0.6       +2.1       +0.6             +0.5             +2.0

Low                 +0.3       +1.8       +0.4             +0.4            +1.75

Mean                +0.5       +2.0       +0.5             +0.5             +1.8

No of

Respondents           15         15          8               14               14

Previous

Report              +0.6       +1.9       +0.4             +0.4             +1.9

NAB                +0.43       +1.9       +0.5            +0.45            +1.85

Westpac            +0.48       +1.9      +0.55             +0.5             +1.9

ANZ                 +0.4       +1.8        N/A             +0.5             +1.9

CBA                 +0.5       +2.0       +0.6             +0.5             +2.0

UBS                 +0.5       +1.9       +0.5             +0.5             +1.9

Deutsche Bank       +0.3       +1.8       +0.4             +0.4             +1.8

TD Securities        N/A        N/A       +0.5             +0.5              N/A

RBC Capital         +0.6       +2.1        N/A            +0.45             +1.8

BA-ML               +0.6       +2.0        N/A             +0.5             +1.9

St George           +0.4       +1.9        N/A             +0.5             +1.9

HSBC                +0.6       +2.1       +0.6            +0.55             +1.9

Moody's             +0.5       +1.9        N/A              N/A              N/A

StanChart           +0.5       +2.0        N/A              N/A             +1.8

JP Morgan           +0.4       +1.9       +0.4             +0.4             +1.8

Nomura              +0.6       +2.1      +0.48            +0.48             +1.8

Macquarie           +0.5       +2.0        N/A             +0.4             +1.8

     * Y/Y Underlying inflation is assumed as the average of trimmed mean and

weighted median measures of inflation.

--MNI Sydney Bureau; tel: +61 2-9716-5467; email: sophia.rodrigues@marketnews.com

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