Westpac Scraps Double Hike Call as June CPI Drops Below Expectations

The Australian Bureau of Statistics' latest inflation figures have caused Westpac to reevaluate its forecast for the Reserve Bank of Australia's (RBA) next move. The headline Consumer Price Index (CPI) rose 3.8 per cent in the 12 months to June, below market expectations and the RBA's own forecast.

The strongest contributors to headline inflation were housing, which climbed 6.8 per cent, food and non-alcoholic beverages, up 3.3 per cent, and recreation and culture, also up 3.3 per cent. However, on a monthly basis, CPI edged down 0.1 per cent in June.

Westpac's reaction to the release was significant, with the bank abandoning its forecast for two further cash rate hikes this year. Westpac chief economist Luci Ellis noted that recent months had not seen the strong second-round effects on prices that the bank had initially forecasted.