NAB Look For Modest Undershoot In Trimmed Mean CPI (Vs. RBA Exp.)

Ahead of the Q1 CPI print NAB expect “Q1 CPI to show inflation is past its peak, but with still strong reads across domestically sensitive components. We expect headline CPI of 1.3% q/q and 7.0% y/y and the closely watched Trimmed Mean at 1.3% q/q and 6.6% y/y.”

• “Such a result would be a tenth below the RBA’s February SoMP trimmed mean forecast of 1.4% but we think that forecast is dated and the RBA is expecting a lower number based off the Monthly CPI Indicator. RBA implications will not be clear cut unless CPI prints far away from consensus, and the details will be just as important in informing the RBA’s inflation outlook. The recent RBA Minutes confirmed that the RBA is already stretching its 2-3% inflation target, and that a return of inflation to target any longer than the February forecast of 3% by mid-2025 would be inconsistent with their mandate, and that forecast included one more rate hike. NAB’s central case is the RBA will remain on hold, but a print in line with our expectations would still see an elevated risk of the RBA moving in May.”