Westpac are out with their opinion that high inflation maybe a thing of the past locally due to revised forecasts on food, fuel and of course the crash in house prices.
The recent price caps on energy announced by the Albanese government combined with lower food prices after their recent surge has pushed Westpac into thinking that headline CPI inflation may actually be below 4% for 2023.
More here:
Incorporating all these factors plus our updated commodity and foreign exchange forecasts (December/January Market Outlook) we have revised our end 2023 CPI and Trimmed Mean forecast. We now see headline CPI inflation at 3.9%yr at end 2023, down from our previous forecast of 4.1%yr and meaningfully less than the RBA’s forecast of 4.7%yr.
Our Trimmed Mean inflation forecast for end 2023 is now 3.6%yr, down from our previous forecast of 3.8%yr which matched the RBA’s forecast.
As 2022 ends we are increasingly confident that the December quarter will see the peak in the inflationary pulse. So as we head into 2023 the question is shifting from worrying about how much further the inflationary pulse may have left to run to questioning how fast will that pulse disinflate.
This would be great news if it comes true. It would also increase the likelihood of the RBA cutting rates more heavily in the second half of 2023.
