VIEW: NAB Don’t See Monthly CPI Print As A Mover For The RBA

In lieu of today’s monthly CPI data NAB “does not think today’s data will do much to shift the RBA’s assessment of the inflation backdrop, though some of the detail is consistent with growing confidence that some of the sectoral drivers of the initial inflation surge are turning disinflationary. Key for the RBA remains the outlook for wages growth, the extent to which wage and price setting behaviour has shifted, and what this means for whether inflation will fall sustainably back to target. We continue to see the RBA raising rates by 25bp in February and March.”

• “Looking forward, the key goods and construction drivers of the initial inflation surge are at or past their peaks and are set to be disinflationary through 2023. The large new dwelling’s component rose just 0.1% M/M in November, compared to a monthly pace of around 2% earlier in the year. At that pace new dwellings alone will subtract 0.5ppt from headline and 0.2ppt from trimmed mean inflation relative to H122. Improved supply chains and the slowing in construction cost inflation adds further confidence in our expectation for disinflation through 2023.”