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Annette Beacher, chief Asia-Pacific macro strategist at TD Securities, suggests that the Australia’s Inflation Gauge measure tends to slightly underestimate headline CPI for Q1, so they are staying with ‘top down’ headline CPI at +0.5%/q and 1.8%/y.

Key Quotes

“Consensus is weaker at +0.2%/q.”

“We also arrive at +0.5%/q from a ‘bottom up’ perspective.”

“We look for Mar qtr trimmed mean to increase by +0.5%/q (Inflation Gauge +0.2%/q but regularly underestimates Q1) lowering the annual rate to 1.77%/y. Combined with a +0.5%/q lift in the weighted median measure (1.70%/ y) we see overall annual underlying inflation at 1.74%/y, a little lower than the Dec qtr print of 1.77%/y (excluding revisions).”

“Consensus overwhelmingly favours +0.4%/q for trimmed mean, with a couple of us at +0.5%/q, within a narrow +0.3% to +0.5%/q (we are ignoring the +0.9%/q outlier). Weighted median consensus is similar. With such a near unanimous prediction at +0.4/+0.5%/q the risk of a “surprise” on the day is high.”