📝April CPI Data Challenges RBA's Disinflation Forecast: NAB

Food inflation showed marginal moderation in y/y terms from 8.1% in March to 7.9% in April. In monthly terms however, broad based price rises were still evident across food categories.

Two key points are worth noting outside of base effects from automotive fuel which drove the y/y rate higher. The first is signs goods inflation does not look to have slowed further, and indeed furniture unwound its progress in Q1, up 4.9% in April. The RBA forecasts goods disinflation to continue over 2023, and today’s data suggests it may not be a smooth process. The second is rent inflation has picked up further (0.8% m/m) and rents will be a large contributor to CPI for some time given pressures in the rental market.

Looking to the June RBA meeting, with the RBA data dependent, every meeting is naturally live. A key input alongside today’s data will likely be the Fair Work Commission’s National Minimum/Award Wage increase to be announced on Friday (2 June). We think an increase in awards of greater than 5% would challenge the RBA’s wage’s view.

- NAB