Westpac Sees Cooling Inflation Despite Hot July CPI Reading
Westpac, one of Australia's largest banks, has made an assessment that inflation is cooling overall in the country. However, it expects July's consumer price index (CPI) to still be high at 0.8% on the month due to rising travel and gasoline prices.
The bank attributes the monthly jump primarily to holiday travel and fuel costs, with gas prices increased by a partial reversal of temporary fuel excise cuts. Westpac also lowered its forecast for broader inflation, predicting it will rise 1.1% in the third quarter and 0.8% in the fourth quarter, resulting in an annual rate of 3.9%, slightly above the Reserve Bank of Australia's latest projection of 3.6%.
Westpac focuses on 'underlying' inflation, which strips out large price fluctuations to show the trend. Its preferred gauge, the trimmed mean, is forecast to rise 0.4% in July, keeping the annual trimmed mean around 3.5%. This figure will be closely watched by rate traders.