First pass suggests an upside risk to our June quarter CPI estimate of 0.8%qtr (2.2%yr) but a more modest upside risk to our Trimmed Mean estimate of 0.6%qtr (2.7%yr).
The Monthly CPI Indicator gained 2.4% in the year to April, stronger than Westpac’s estimate of 1.9%yr and just a touch more than the market’s estimate of 2.3%yr. There was a reasonably wide range of estimates this month, from a high of 2.6%yr to a low of 1.9%yr.
The CPI Indicator was 0.8% month-on-month, stronger than Westpac’s published monthly near-cast of 0.3% with the result boosted by a larger than expected increase in medical & hospital services and dwelling prices. The Trimmed Mean estimate for April was 2.8%yr, up very slightly from a 2.7%yr pace in March.
Westpac’s estimate for the June quarter Trimmed Mean is 2.7%yr falling to 2.6%yr in the September quarter.
Based on the data from the April Monthly CPI Indicator, we see no compelling reasons to change our current June quarter CPI estimate: 0.8%qtr/2.2%yr for the headline CPI and 0.6%qtr/2.7%yr for the Trimmed Mean.
April Monthly CPI Indicator in more detail
Excluding volatile items & holiday travel, the Monthly CPI came in at 2.8%yr in April, a modest increase from the 2.6%yr pace in March. This series excludes automotive fuel, fruit and vegetables, and holiday travel and accommodation.
Electricity prices gained 1.5% in the month compared to the risk of a small decline we expected, with the June quarter rebates rolling in. Clearly, the ending of the Qld $1,000 lump sum rebates is still pushing up national average prices.
The overall impact of the rebates is clear with the ABS calculating that electricity prices falling –6.5% in the year to April. Including government electricity rebates, electricity prices for households have fallen by 1.0% since June 2023. Excluding these rebates, electricity prices for households would have increased 17.6% since June 2023.
The Commonwealth government has extended the EBRF for six months to end 2025 with households receiving an additional quarterly payment of $75 in the September and December quarters. This delays the full rebound in electricity prices until early 2026. We don’t expect the Qld government to repeat the $1,000 lump sum rebate but it is likely that WA will repeat the energy rebate programme.
April is the first month of the quarter and provides an update on the following quarterly price surveys which are predominately durable goods. As these prices are survey only once a quarter they flow directly into our June quarterly estimate. In April we had updates on:
- Garments for infants & children: 5.0% (6.0% fcs)
- Footwear for men: 5.5% (1.7% fcs)
- Footwear for women: 7.4% (3.1% fcs)
- Footwear for infants & children: –0.3% (5.2% fcs)
- Clothing accessories: –1.3% (2.1% fcs)
- Cleaning, repair & hire of clothing: 1.3% (0.5% fcs)
- Maintenance & repair of dwellings: 0.5% (0.5% fcs)
- Furniture: 2.9% (2.8% fcs)
- Carpets & floor coverings: 0.4% (0.3% fcs)
- Household textiles: 3.6% (2.2% fcs)
- Major household appliances: 1.7% (0.6% fcs)
- Small electrical appliances: 1.3% (0.8% fcs)
- Glassware, tableware & utensils: 0.5% (–1.2%)
- Tools & equipment: –0.1% (–0.1% fcs)
Taken at face value, the April Monthly CPI would suggest upside risk to our June quarter estimates for the CPI and the Trimmed Mean.
However, the quarterly CPI is not a simple average of the Monthly CPI Indicator. History has taught us that a simple ‘face value’ estimate can be misleading. In addition, several volatile items, for example food prices, can quickly revert more than we have in our current monthly profile.
We have entered all the monthly estimates and made estimates for May and June for those variables that are surveyed monthly to generate quarterly average estimates. We also enter the quarterly estimates from the monthly survey as they become available. This provides an updated bottom-up estimate for the June quarter CPI and Trimmed Mean. This update suggests an upside risk to our headline CPI estimate but a more modest upside risk to our Trimmed Mean estimate.
 but a more modest upside risk to our Trimmed Mean estimate of 0.6%qtr (2.7%yr).){kind=link}