Analysts at ANZ suggest that their forecast is for the Australia’s headline inflation in Q1 to be flat, pushing the annual rate down to 1.4%.
Key Quotes
“A sharp fall in petrol prices is the largest negative for the headline figure, as in the prior quarter. Alcohol & tobacco, pharmaceutical products and education will make positive contributions.”
“Core prices are expected to rise 0.4% q/q, which lowers the annual rate to 1.7%. We see the risks to core inflation for the quarter as balanced.”
“Our forecast for core inflation is broadly consistent with what the RBA published in its February Statement on Monetary Policy. The Bank needs a little over 0.9% inflation in the first half of 2019 to reach its 1.75% y/y trimmed mean forecast for June 2019.”
“If core inflation for the quarter comes in at 0.3% or lower, it is likely that the near-term inflation outlook will need to be revised lower. A lower starting point will challenge the return to 2% over the medium-term and thus make a rate cut in May a real possibility.”
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