Inflation surges to new highs in Q2 – UOB

Economist at UOB Group Lee Sue Ann assesses the latest inflation figures in Australia.

Key Takeaways

“Australia’s headline CPI came in at 0.8% q/q for 4Q20, higher than the estimate of 0.7% q/q, following the 0.6% q/q reading in the first quarter.”

“Compared to the same period a year ago, CPI advanced 3.8% y/y, the fastest annual pace in almost 13 years, up from 1.1% y/y reading in the previous three months. The increase in annual CPI inflation includes some ‘base effects’ following the introduction of free child care and a record fall in fuel prices in the June 2020 quarter. But a far tamer reading for core inflation suggests the spike would be fleeting. Trimmed mean CPI rose 0.5% q/q versus a revised reading of 0.4% q/q in the previous quarter. Compared to the same period one year ago, it was 1.6% y/y, in line with estimates, and higher from the 1.1% y/y reading in the previous quarter. The more benign underlying trend was also evident in the Reserve Bank of Australia’s weighted median CPI, which was up 0.5% q/q, up from a 0.4% q/q reading in 1Q21.”

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