VIEW: ANZ Sees Downside Risks To Its Q1 CPI Forecast

January CPI was steady at 3.4% y/y which was less than the Bloomberg consensus. ANZ says that it may signal some downside risk to its Q1 CPI forecast but it will wait for the February data as January has few updates on the services components. It currently expects a 0.7% q/q rise in Q1.

• “While underlying inflation measures remain higher than the headline measure, they continued the disinflation story. Annual inflation eased to 3.8% y/y for trimmed mean (down from 4.0%y/y) and to 4.1% y/y for the measure excluding volatile items and holiday travel (down from 4.2% y/y).”
• “Updated weights for the CPI basket were also published. The biggest change was an increase in holiday travel and accommodation to 6.02% of the basket, up from 5.38%.”
• “Electricity prices rose 0.9% m/m, much weaker than we had expected. But the ABS indicated that a 14% gap still exists between credit-affected prices and actual prices, suggesting upward pressure is still to come.”