Australian Q3 CPI preview: 0.9%qtr and 1.5%yr - Westpac

Research Team at Westpac’s forecast for the Australia’s headline CPI is 0.9%qtr which lifts the annual pace to 1.5%yr from 1.0%yr.

Key Quotes

“September is traditionally a stronger quarter (mostly due to the annual price resetting for administrated prices) with the ABS seasonal factor worth 0.3ppts. This results in the seasonally adjusted CPI rising a smaller 0.6%qtr.

Overall, traded prices are forecast to rise 0.9%, despite the 3.4% fall in auto fuel prices, which boosts the annual pace from 0.0%yr to 0.6%yr. Excluding fruit, vegetables, fuel and tobacco, traded goods prices are forecast to rise 0.3%/0.6%yr in Q3 highlighting just how modest imported inflationary pressures are.

Core inflation (average) is forecast to print 0.4%qtr (0.39% at two decimal places) which will see annual core inflation lift to 1.6%yr from 1.5%yr. The trimmed mean is forecast to rise 0.38% while the weighted median forecast is 0.40%. The six month annualised pace of the average of the core measures is forecast to lift to 1.7%yr from 1.3%yr in Q2 which remains a modest inflationary pulse.

The pass through from the early weakness in the AUD did not provide the normal boost you would expect and so we doubt the recent appreciation of the currency will act as a further brake on prices. Outside of housing, where we are forecasting a modest gain following a statistical bounce in Q2, the risks to our forecast are balanced.”