Justin Smirk, analyst at Westpac, suggests that the Westpac’s forecast for the Australia’s December quarter headline CPI is 0.3%qtr, which will see the annual pace ease to 1.5%yr from 1.9%yr.
Key Quotes
“Westpac’s forecast also takes the two quarter annualised pace down to 1.4%yr from 1.6%yr.”
“The December quarter is a seasonally soft quarter with the ABS projecting a seasonal factor of +0.2ppt. However, it was only just back in December 2016 that that quarter’s seasonal factor was actually a positive. As such we caution there may be significant revisions to the December quarter seasonal factors.”
“Core inflation is forecast to print 0.3%qtr (0.32% at two decimal places) moderating the annual pace to 1.6%yr from 1.7%yr. The trimmed mean is forecast to rise 0.30% and the weighted median is forecast to rise 0.34%. The two quarter annualised pace of core inflation eases back to a very modest 1.3%yr from 1.5%yr putting the momentum in inflation well below the RBA’s target band.”
“Core inflation is forecast to be below the bottom of the RBA target band as moderating housing costs hold back overall inflationary pressures. Overlay a competitive deflationary pressure in consumer goods so it is hard to see core inflation breaking much higher any time soon.”
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