Australian CPI Preview: Banks expecting headline CPI to print in between 0.3-0.4% for Dec quarter

Tomorrow, we have an all-important release of Australian Q4 CPI numbers, and as we get closer to the release time, here are the expectations by analysts and economists of banks regarding the same.

TDS

“We look for +0.4%/q for headline CPI via Fuel -0.8%/q, i.e. flat for Transport, drought to boost Food (+1.0%/q) and seasonal excise tax boost for Tobacco and Alcohol (+2.9%/q). Expect drags from Healthcare and Communication.”

“Trim mean +0.4%/q or 1.78%/y and +0.5%/q for weighted median (1.69%/y) sees average core inflation again at 1.75%/y. Mkt and TD are the same this time around. Markets are looking for a 'soft' print as a few years of disappointment justifies caution.”

“An as-expected print (+0.45%/q for the average of the core measures) means move onto wages next month. However, we will join the rate cut chorus if core CPI slumps -0.5%pts to the downside in annual terms (i.e. 1.25%/y instead of 1.75%/y) because such a significant surprise miss was the trigger for the May 2016 RBA cut.”

Westpac

“Westpac’s forecast for the December quarter headline CPI is 0.3%qtr which will see the annual pace ease to 1.5%yr from 1.9%yr. Westpac’s forecast also takes the two quarter annualised pace down to 1.4%yr from 1.6%yr.”

“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.”

“Traded prices are forecast to rise 0.2% in the quarter to be up just 1.1%yr while non-traded prices are forecast to rise 0.3%qtr/1.8%yr as modest housing costs gains are constraining inflation in this group.”