From National Australia Bank, previewing the inflation data due from Australia on Wednesday, 26 April 2023:
- at 11.30 am Sydney time, which is 013.0 GMT and 2130 US Eastern time
and implications for the Reserve Bank of Australia (next meeting is May 2).
In brief:
- We expect Q1 CPI ... to confirm inflation peaked in Q4 2022 and to have decelerated marginally more than what the RBA had pencilled in back in February.
- We see trimmed mean inflation at 1.3% q/q (6.6% y/y), one tenth softer than the RBA’s February forecast of 1.4%. For headline we see a 1.3% q/q (7.0% y/y).
- Even though we expect inflation to come in marginally softer than the RBA’s SoMP forecasts, we think those forecasts are dated given the monthly inflation indicator. A print in line with our forecasts would not remove the risk of a May hike which we see as a close decision given the RBA debated 0 or 25bps in April with a strong case given in the Minutes for moving by 25bps in April.
- we expect outright price declines among many household goods and clothing categories
- New dwelling construction cost inflation has also decelerated according and should support disinflation over 2023
