Australia: Expect headline CPI to rise 0.8% q/q and 2.0% y/y - NAB

Analysts at National Australia Bank (NAB) offer their thoughts on the Australian consumer prices data due later on Wednesday.

Key Quotes:

“Hefty increases in electricity and gas prices are expected to be the defining feature for headline inflation, but how much it could flow to underlying measures in this quarter and in the quarters ahead is more uncertain and dependent on the ability of firms to pass on higher costs to consumers.

NAB expects headline CPI to rise 0.8% q/q and 2.0% y/y 

Higher electricity and energy prices will contribute the lion's share (adding some 0.4% points to growth in the quarter)

Acting as some offset is a fall in petrol prices and a decline in vegetable prices... There may be some downside risk to our forecast if retail vegetable prices fall as far as wholesale prices; wholesale vegetable prices fell 16% which we moderated to a 4% decline in the CPI

Core inflation is likely to remain stable

with the Trimmed Mean (0.5% q/q and 2.0% y/y)

and the Weighted Median (0.4%/1.9%) both mirroring recent growth

Q3 CPI along the lines we are expecting is broadly on track with the RBA's August Statement of Monetary Policy forecasts”