NAB Dive Into The Monthly CPI Ahead Of The Release

Ahead of today’s monthly CPI reading NAB “forecast the Monthly CPI indicator to fall to 7.2% y/y. With the RBA keen on as timely a read on inflation developments as possible, it will be closely watched. We noted that the fall in the January indicator from 8.4% to 7.4% was not as informative as it looks, but did support the case that Australian CPI has peaked.”

• “February does contain better coverage of some key services categories, but it remains the case that a full picture of inflation dynamics is not available until the Q1 CPI on 26 April.”
• “Focus for the RBA will be as much on what the available subcategories can say about the risks in Q1 CPI and the trends in services inflation than the headline number itself. While a reasonable coverage of services prices are measured in February, only limited subcomponents are published.”
• “In terms of the key drivers in the month, education prices are measured annually in February and are set to be a strong contributor. A key uncertainty is again travel and accommodation.”
• “Base effects from a year ago help put downward pressure on the CPI. We expect the monthly CPI Indicator in March to fall further in y/y terms from February, but to print below the headline y/y rate in the quarterly CPI.”