subscribe to our newsletter
CPI tipped to lift to 2%

CPI tipped to lift to 2%

A major bank forecasts headline CPI for Q1 to rise to 2 per cent, however expects core inflation to remain below the policy target band and not return to target until mid-2018.

According to the latest ANZ Economic Insight – Australia, the headline CPI is likely to increase to 2 per cent when CPI data for the first quarter is released on Wednesday, 26 April.

However, ANZ expects that core inflation will remain below the policy target band at 1.7 per cent year-on-year.

“Indeed, we do not see core inflation back within the band until mid-2018,” ANZ senior economist Jo Masters said.

“Seasonal increases in education, childcare and pharmaceutical products, together with petrol prices, will add to headline CPI in Q1, but be partially offset by seasonal falls in international holiday and accommodation prices and fresh fruit and vegetables.

“This CPI print will also include the new methodology for measuring new dwelling purchase prices, which will include the apartment segment for the first time.”

Ms Masters said that the onus is on market services inflation to lift the overall inflation profile.

“However, wages data disappointed in Q4 and ongoing spare capacity in the labour market suggests only a gradual improvement,” she said.

In regards to the outcome of the RBA’s monthly meeting tomorrow, Ms Masters highlighted that from a policy perspective, the weak inflation profile is being countered by concerns around the housing market and financial imbalances.

“Against this backdrop, we continue to see the RBA on hold for the foreseeable future,” she concluded.

[Related: ‘Messy’ CPI result could stay RBA’s hand]


 

CPI tipped to lift to 2%
mortgagebusiness logo

Latest News

A major brokerage has announced that it will be offering brokers the opportunity to enter into a financial planning franchise agreement, as...

First home buyers could be exposing themselves to “significant risk” as they dip into the housing market in increasing numbers, accordin...

The Productivity Commission’s recommendations are unlikely to effect “drastic change” in the banking sector, and would have a “limit...

FROM THE WEB

podcast

LATEST PODCAST: Cash rate to remain unchanged, corporate cops for the banks and a new type of credit card

Do you expect access to credit to get harder this year?