VIEW: Risks To ANZ November Rate Cut Forecast

April CPI inflation came in higher-than-expected at 3.6% y/y after 3.5% in March, “five-month high”. The underlying trimmed mean picked up to 4.1% from 4.0%. ANZ has retained its November rate cut forecast but the “risks remain tilted to a later start”.

• “The April data are underweight services and non-tradables, so we will get a better gauge on domestic price pressures, and the implications for the policy outlook, in the May data.”
• “During the month, prices rose 0.7% m/m, driven by:

- A 2.0% m/m jump in health prices, reflecting private health insurance premium rises from 1 April. We had assumed medical and hospital services would be imputed for the month, as per last quarter, so this accounts for a large part of the gap between our forecast and the actual print.
- A stronger than expected seasonal rise of 4.0% m/m in clothing & footwear prices, despite the weak consumer environment,
- A 2.2% m/m rise in automotive fuel prices, and
- A 2.0% increase in recreation prices, reflecting a 10.6% m/m surge in international holiday prices during the Easter and school holidays.”