Australian CPI Preview: Forecasts from seven major banks, sticky inflation figures


Australian Consumer Price Index (CPI) figures are due on Wednesday, January 25 at 00:30 GMT and as we get closer to the release time, here are forecasts from economists and researchers of seven major banks regarding the upcoming inflation data.

Headline inflation is expected at 7.5% year-on-year in Q4 vs. 7.3% in Q3, while trimmed mean is expected at 6.5% YoY vs. 6.1% in Q3. For December alone, headline is expected at 7.7% YoY vs. 7.3% in November. 

ANZ

“We have lifted our Q4 trimmed mean CPI inflation forecast to 1.7% QoQ. This would see the annual rate reach 6.7%, exceeding the RBA’s forecast of 6.5% YoY. We forecast non-tradable and services inflation will both print at 1.9% QoQ, annualising at almost 8%. Accordingly, we see the risks to our terminal cash rate pick of 3.85% as weighted to the upside. We maintain our headline CPI inflation forecast at 1.8% QoQ. This would see the annual rate lift to 7.7%, below the RBA’s 8.0% YoY pick. But we think it would take a downside surprise in trimmed mean CPI relative to the RBA’s 6.5% YoY forecast for it to consider a pause in cash rate hikes in the next few months.”

ING

“Australian retail gasoline prices were down more than 8% MoM in December. Feeding this figure through to the transport component, we could see a smaller increase in the aggregate monthly price level of 0.2% MoM in December, down from an increase of 0.8% MoM in November. This should bring the December inflation rate down to 6.9% YoY, and the fourth quarter inflation rate down to 7.0%.”

Westpac

“We forecast a 1.5% rise in the December quarter boosting the annual pace 0.1ppt to 7.4% which is our forecast peak in the annual pace of inflation for the current cycle. We are forecasting the annual pace of headline inflation to ease back to 3.7%yr by end-2023. The Trimmed Mean is forecast to lift 1.6% in December, a moderation from the 1.8% gain in September which we are forecasting to be the largest quarterly rise this cycle. The annual pace for the Trimmed Mean is set to lift to 6.6%yr, from 6.1%yr in September, which again is our forecast peak in core inflation. We are forecasting core inflation to moderate to 3.4%yr by end 2023.” 

NAB

“CPI inflation is expected to have peaked in Q4 2022. Lower-than-expected fuel prices and lower-than-feared fruit and vegetable prices despite recent floods mean we now expect 1.6% QoQ and a peak of 7.5% YoY. Despite that, we expect the detail to provide little comfort about the inflation backdrop with strong services inflation likely. For trimmed mean we forecast 1.6% QoQ and 6.6% YoY. While our forecast print is lower than Q3’s 1.8%, on our numbers this is almost entirely due to slowing new dwelling construction cost rises. We expect market services and labour-market sensitive inflation to remain uncomfortably strong amid elevated labour cost growth and strong demand.”

TDS

“We put annual inflation at 7.5%, some distance from the 8% RBA forecast. While lower headline inflation is positive, it's the trimmed measure that will draw more attention. TD is at 1.6% QoQ (6.6% YoY). A trimmed print between 6.1% and 6.5% locks in a 25 bps Feb hike.”

SocGen

“Both headline and core (i.e., trimmed mean) inflation are likely to have risen further in December, which would also lead to an increase in quarterly inflation during 4Q22. The rise in electricity prices that is reflected in CPI only on a quarterly basis (March, June, September and December) will boost the headline inflation figure in December, despite the reduction of automotive fuel inflation (led by the decline in crude oil prices) and housing inflation (driven by housing market weakness that is weighing on new dwelling purchase prices). Trimmed mean inflation will also likely rise a bit in December, reflecting the broad-based inflation pressures seen in the Australian economy. If our forecasts for the December inflation figures are correct, it means that the quarterly inflation in 4Q is higher than 3Q, both in terms of headline and trimmed mean inflation. If it is confirmed that inflation continued to increase until the end of 2022, it will support further tightening measures by the RBA, which argues that inflation has yet to peak in Australia (while the peak of headline inflation has already been confirmed in quite few countries, including the US).” 

Citibank

“Australia’s inflation is set to accelerate in Q4 with Citi analysts also upwardly revising their estimate of underlying inflation to 1.5% (previous 1.4%). This is because inflation is more broad-based, particularly across the services sector. On a yearly basis, headline inflation is expected to accelerate to 7.7% in Q4, and underlying inflation to 6.1%. These are still comfortably within the RBA’s previous forecasts of 8% and 6.5%, respectively but risks to the Q4 CPI report remain to the upside due to a tight labor market with wages growth accelerating.”

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

EUR/USD stabilizes above 1.0900 ahead of Powell speech

EUR/USD stabilizes above 1.0900 ahead of Powell speech

EUR/USD fluctuates slightly above 1.0900 after erasing the bearish opening gap. The positive opening in Wall Street makes it difficult for the US Dollar to gather strength and helps the pair hold its ground ahead of Fed Chairman Powell's speech at the Economic Club of Washington.

EUR/USD News

GBP/USD struggles to clear 1.3000, eyes on Fed Chairman Powell

GBP/USD struggles to clear 1.3000, eyes on Fed Chairman Powell

GBP/USD finds it difficult to build on the previous week's gains and trades below 1.3000 on Monday. Investors refrain from taking large positions ahead of Fed Chairman Powell's speech and allow the pair to stay in its daily range.

GBP/USD News

Gold climbs above $2,420 following earlier decline

Gold climbs above $2,420 following earlier decline

Gold regains its traction and trades in positive territory slightly above $2,420 after dropping toward $2,400 at the beginning of the week. Investors await Fed Chairman Powell's appearance at the Economic Club of Washington.

Gold News

Crypto Today: Bitcoin, Ethereum and XRP what to expect as SEC executive says Howey test applies to cryptos

Crypto Today: Bitcoin, Ethereum and XRP what to expect as SEC executive says Howey test applies to cryptos

Bitcoin trades above $62,500 on Monday, sustains above key support as head of US SEC enforcement division says Howey test applies to cryptos. Ethereum and XRP trade above key support, extending gains by nearly 3% on the day. 

Read more

Five fundamentals for the week: Markets set to move on Trump fallout, ECB, US Retail Sales, more Premium

Five fundamentals for the week: Markets set to move on Trump fallout, ECB, US Retail Sales, more

"Donald Trump was shot" – the shocking reports from Pennsylvania reverberated across markets and will likely continue doing so. Investors will also watch for further signs of slowdown and European defiance. Here are the three key events to watch.

Read more

Forex MAJORS

Cryptocurrencies

Signatures