Energy rebates come to an end
January’s data follows the last of the energy rebates coming to an end, which will cause a bump in inflation.
“The RBA will be focused on the underlying inflation impulse and what it signals about the persistence of recent price pressures”, Commonwealth Bank Senior Economist Trent Saunders said in a preview note. “However, with significant swings expected in some volatile items, attention will also turn to these categories, especially electricity prices.”
The end of subsidies would be “partly offset by a fall in fuel prices”, Saunders said.
But even with inflation remaining steady, economists are still tipping further interest rate hikes with the Commonwealth Bank and NAB both tipping an increase to 4.1 per at the Reserve Bank’s board meeting in May.
“At this stage, even if quarterly trimmed mean inflation comes in slightly softer than the RBA’s forecasts, that alone would be unlikely to deter the board from proceeding with another increase in the cash rate,” Saunders added.