Australian inflation tanking?

Via Westpac:

• Westpac’s forecast for the March quarter CPI is 0.1%qtr with the annual pace easing back to 1.4%yr from 1.8%yr. • The March quarter is a seasonally soft quarter with the ABS projecting a seasonal factor of +0.2ppt. The seasonally adjusted CPI is forecast to rise 0.3%.

• Core inflation is forecast to print 0.3%qtr (0.33% at two decimal places) holding the annual pace at 1.6%yr. The trimmed mean is forecast to rise 0.34%qtr and the weighted median is forecast to rise 0.33%qtr.

• Drought conditions have a mixed impact on food prices but overall food should rise 1.1%qtr. The other main positives are alcohol & tobacco along with the annual price increases for healthcare and education which combined almost fully offset falling fuel prices, recreation and clothing & footwear.

• Traded prices are forecast to fall 0.6%qtr while non-traded prices are forecast to rise 0.6%qtr.

• Core inflation is to remain well below the bottom of the RBA target band as moderating housing costs hold back modest inflationary pressures elsewhere. Overlay a competitive deflationary pressure in consumer goods and it is hard to see core inflation breaking much higher any time soon.

Wages growth to role next.

Comments

  1. Pecunia Nervus Belli

    Worth reflecting on the Baltic – it has since returned to its usefulness after the shipping glut. The Baltic was mentioned on this site within the last few months – it has lifted its dead head from the bed on the stimulus, also reported here, from China and to a lesser the Trump “Bump”.

    The trend is on course though – global slow down and the decadal global financial event now well over due is still on course with the Baltic.

    Ships Ahoy.

  2. Yup. Coles own-brand 2 litre milk has just deflated from $2.00 to $2.20.

    However, I saw that with my own lying eyes. Best to ignore and swallow the official Govt statistics instead 😉

    There’s deflation on deck alright but its not in energy and food — it’s in house / land prices. As any fool knows, in an economic slowdown it is very rarely the non-discretionary sector that sees price falls. That’s precisely the sector that gets neglected during the boom and leads to supply shortages.

  3. I think you’ve been living down a hole.

    Costs of goods in particular are massively inflated in Australia. Go into any supermarket. Also to try and seem competitive, availablility is of choice is reduced as the duopoly treats shelf space like realestate, so you get the choice of 1 or 2 manufacturers if you are lucky.