Westpac: Peak Inflation In Rear-View

Ahead of the Q1 CPI print Westpac note that “the December quarter CPI rose 1.9% with annual inflation lifting to 7.8%, the fastest since March 1990. The Trimmed Mean lifted 1.7% with the annual pace increasing to 6.9%, the fastest pace since December 1988 and above the RBA’s forecast of 6.5%yr. The most significant contributions came from domestic holiday travel & accommodation, electricity, and international holiday travel.”

• “The March quarter CPI is forecast at 1.4% taking the annual pace down 0.8ppt to 7.0%. The step down is due to an ongoing moderation in inflation for food, a seasonal decline in clothing & footwear, a further moderation in dwellings and household contents & services inflation, as well as falling prices for auto fuel and audio visual & computing equipment.”
• “The Trimmed Mean is forecast to lift 1.4% in March with the annual pace set to moderate to 6.7%, down from 6.9% for December, which we see as the peak for the cycle.”