Main impetus from food & NAB, which rose 7.0%y/y in March from 5.4%y/y in February

Core inflation up, but within target range

CPI inflation accelerated from 5.9%y/y in February to 6.0%y/y in March, slightly above Bloomberg consensus for 5.9% y/y, and slightly below our expectation of 6.1%y/y. As anticipated, food inflation was the main driver behind the increase in headline CPI, adding 1.1ppts to the y/y change in March compared with 0.8ppts in February.

Offsetting this was transport inflation, which moderated to 6.9%y/y from 8.0%y/y in February, adding 1.2ppts to headline CPI in March compared with 1.3ppts in February. This was chiefly due to petrol price inflation slowing to 9.5%y/y in March from 14.0%y/y in February. Alcoholic beverages and tobacco inflation also subsided to 5.8%y/y in March from 6.5% y/y in February, adding 0.3ppts to headline CPI inflation in March against 0.4ppts in February.

Overall, non-durable goods’ inflation was unchanged (from February) at 7.1%y/y in March. Semi-durable goods’ inflation ticked up to 4.6%y/y in March from 4.3%y/y in February, on the back of accelerating clothing and footwear inflation, which rose to 4.7%y/y in March from 4.2%y/y in February. Durable goods’ inflation increased to 3.4%y/y in March from 3.1%y/y in February, largely owing to higher motor vehicle price inflation which rose to 5.1%y/y in March from 4.7%y/y in February.

Services’ inflation ticked up to 5.9%y/y in March after having softened to 5.7%y/y in February from 6.0% in January. Many key components were subject to scheduled surveys in March. These included actual rentals (5.1%y/y in March from 5.0%y/y in February), owners’ equivalent rent (5.0%y/y in March from 4.7%y/y in February), public transport (6.6%y/y in March from 4.6%y/y in February), and education (8.7%y/y in March from 9.0%y/y in February). Recreation and cultural services’ inflation held steady (from February) at 1.3%y/y in March.

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