Via UBS:
Preview: Q2 CPI to rise 0.6% q/q, lifting to 2.3% y/y – but ~½%pt from petrol
Based on our proprietary survey, we forecast Q2 headline CPI (due July 25) to rise 0.6% q/q (vs our initial 0.5%) – albeit after only 0.4% in Q1 was the 6th straight downside surprise to consensus. (We estimate re-weighting will lower CPI by ~0.05%pts.) While the y/y lifts to 2.3%, the highest since 2014, & well above the RBA’s 2% forecast, this mainly reflects oil lifting fuel prices (6.7% q/q, 0.2%pts q/q; 0.5%pts y/y), & comes after a record long ‘miss’ with 13 of the last 14 quarters below the RBA’s 2-3% target. We also use the UBS Evidence Lab Grocery Price Tracker to significantly broaden our survey with ~50k weekly prices across Coles & Woolworths, weighted to ABS CPI subgroups. UBS Economics forecast ~flat q/q food prices.
