Westpac on monthly inflation.
The Monthly CPI Indicator gained 2.4% in the year to April, stronger than Westpac’s estimate of 1.9%yr and just a touch more than the market’s estimate of 2.3%yr. There was a reasonably wide range of estimates this month, from a high of 2.6%yr to a low of 1.9%yr.
The CPI Indicator was 0.8% month-on-month, stronger than Westpac’s published monthly near-cast of 0.3% with the result boosted by a larger than expected increase in medical & hospital services and dwelling prices. The Trimmed Mean estimate for April was 2.8%yr, up very slightly from a 2.7%yr pace in March.
Westpac’s estimate for the June quarter Trimmed Mean is 2.7%yr falling to 2.6%yr in the September quarter.
Based on the data from the April Monthly CPI Indicator, we see no compelling reasons to change our current June quarter CPI estimate: 0.8%qtr/2.2%yr for the headline CPI and 0.6%qtr/2.7%yr for the Trimmed Mean.
I would draw your attention to the strong upward pressure on administered prices.
Alcohol, health, education etc. Approximately a quarter of the CPI is indexed to the headline rate at various times. Most are still embedding past inflation that will ebb out over the next few quarters.
No issues for the RBA here.
