Westpac on the Q4 CPI print: - While......>

AUSTRALIA: Westpac on the Q4 CPI print:

- While the December quarter CPI print was greater than both market and Westpac

expectations, inflation is still well contained. There were some modest isolated

inflationary pressures. Tobacco is a clear standout but also worth noting is the

larger than expected gain in holiday travel as well as embryonic indicators that

the disinflationary pulse is easing in some retail sectors - in Q4 household

contents & services outperformed expectations. However, the moderation in

housing inflation continues (for rents and dwelling purchases in particular)

with a jump in electricity prices offsetting the normal seasonal falls in gas

prices this quarter. This is significant as housing's large weighting means it

has a meaningful impact on the estimates of both inflation and core inflation.

As such, with core inflation well below the bottom of the RBA's target band we

can find little to suggest any risk of a meaningful acceleration.