Australia’s Q1 CPI seen rising 0.5 percent - Capital Economics

Analysts at Capital Economics offer a brief preview on what to expect from Tuesday’s Australia’s CPI release for the first quarter due at 0130 GMT.

Key Quotes:

“We estimate that both headline and underlying CPI inflation stayed just below the RBA's 2-3% target range in the first quarter, which will probably be a reoccurring theme throughout the year.

May have been a little more upward pressure on non-seasonally prices than is usually the case in the first quarter of the year if retailers compensated for the heavy discounting provided on clothing and electronics around Black Friday in November.

Prices will also have been boosted by the hikes in utility prices in Victoria on 1st January and the nationwide 1.8% increase in university fees.

Petrol prices probably also rose by around 2.0% q/q.

Intense competition may have led to another fall in food prices

The recent decline in house price inflation points to an easing in the upward pressure from purchases of new dwellings. (See Chart 1.)

A 0.5% q/q rise in total prices would leave headline inflation at 1.9%, while a 0.5% q/q gain in underlying prices would nudge down underlying inflation from 1.9% to 1.8%.”