Australian CPI to rise 0.5% q/q and 1.5% y/y in Q2 - Westpac

Justin Smirk, Senior Economist at Westpac Westpac forecast a 0.5% rise in the June quarter CPI lifting the annual pace to 1.5%yr from 1.3%yr.

Key Quotes:

“The June quarter tends to be a seasonally soft quarter with the ABS projecting a seasonal factor of +0.2ppt. The seasonally adjusted CPI is forecast to rise 0.7%.

The trimmed mean is forecast to rise 0.33%qtr/1.5%yr and the weighted median is forecast to rise 0.30%qtr/1.1%yr.

The average of the core inflation measures is forecast to print 0.31%qtr with the annual pace easing back to 1.3%yr from 1.4%yr.

In June, we forecast that fresh fruit & vegetable prices drag food prices down 0.4%qtr. Housing costs are down slightly due to falling utilities and there is the usual seasonal fall in pharmaceuticals while car prices fall again.

Auto fuel is forecast to make the single largest contribution rising 11%. Alcohol & tobacco rose modestly while clothing & footwear had a positive quarter. Health costs continue to rise solidly (as rising medical & hospital services more than offset falling pharmaceuticals) and there was an unseasonal gain in domestic holiday travel.

Traded prices are forecast to rise 0.8%qtr while non-traded prices are forecast to rise 0.4%qtr.”