Westpac Mark CPI View Lower

Westpac note they have revised down their “Q4 CPI forecast from 2.0% Q/Q to 1.6% Q/Q due to downgrades of forecasts for food, auto fuel and dwelling prices. Some of the revisions have an impact on our Trimmed Mean forecast which has been lowered from 1.8% Q/Q to 1.7% Q/Q.”

• “Our end 2022 forecast for the CPI has been lowered from 8.0% Y/Y to 7.5% Y/Y while the Trimmed Mean forecast is now 6.7% from our earlier estimate of 6.8% Y/Y.”
• “At this stage we do not have enough information to estimate precisely what impact energy rebates may have on the CPI other than to note the impact will be transitory.”
• “We now see headline CPI inflation at 3.9% Y/Y at end ‘23, down from our previous forecast of 4.1% Y/Y and meaningfully less than the RBA’s forecast of 4.7% Y/Y.”
• “Our Trimmed Mean inflation forecast for end ‘23 is now 3.6% Y/Y, down from our previous forecast of 3.8% Y/Y which matched the RBA’s forecast.”
• “As 2022 ends we are increasingly confident that the December quarter will see the peak in the inflationary pulse. So as we head into 2023 the question is shifting from worrying about how much further the inflationary pulse may have left to run to questioning how fast will that pulse disinflate?”