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VIEW: Westpac Expects Inflation Moderation To Continue

AUSTRALIA DATA

Westpac is expecting Q2 CPI to rise slightly more than consensus. It is forecasting it to rise 1.1% q/q and 6.3% y/y with the trimmed mean up 1.1% q/q and 6.0% y/y. December was the peak and inflation should continue to moderate.

  • There should be a sharp moderation in the housing component “due to state government rebates driving down electricity prices in the quarter. The contribution from utilities falls from 0.22ppt in March to –0.05ppt in June. This more than offsets the acceleration in rent inflation.”
  • There will also be seasonal moderations in the contribution from health and education prices.
  • “The Monthly CPI Indicator is turning out to be a very helpful guide to the components of the CPI and we have used the data from the April and May surveys to fine tune our forecasts.” Westpac expects the June monthly CPI to rise to 5.8% from 5.6% in May and above consensus’ 5.4%.

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