RPT--🇦🇺❗️Cable FX Macro Weekly Note: Australia April Consumer Prices

**As seen in Risk In The Week report 05/26/24, subscribe at cablefxm.co.uk/reports

March consumer prices rose by 3.5% Y/y, this was faster than March Australia consumer prices rose 3.5% Y/y, this was faster than both consensus and the prior 3.4%. By now, we could say that Q1 CPI has stabilized and proven to be sticky, as the disinflationary progress from 2023 is not extending. Food prices eased to 3.5% Y/y from 3.6%, and the core metric and trimmed mean accelerated to 4.1% and 4.0%, respectively, the latter is now at the highest since December. Further progress is needed for the RBA to start considering cutting rates, this stance would be a dramatic shift from where we stand as the most recent minutes showed the board considered further tightening. However, the central bank has said it is reasonable to look through the short-term variation in inflation to avoid excessive fine-tuning.

The most recent communications align with UBS' view of higher for longer rates in Australia, they expect the first RBA rate cut to be delivered in February 2025. UBS' thinking comes from ongoing stickiness of service prices and wages, while the policy is less restrictive than in the rest of the G10. For this week, economists at NAB expect April CPI to print a touch lower at 3.4% Y/y while they will be focusing on the ex-volatile fruits, fuel, and holiday travel component