June to be a softer quarter for Australian CPI

June seems historically a softer quarter for the Australian CPI, in part due to the Pharmaceutical Benefit Scheme resetting, the discounting of domestic holiday travel and falling fruit & vegetable prices.

The core measures, which are seasonally adjusted, are forecast to rise 0.5%qtr/2.2%yr (on average) and the 6mth annualised pulse moderates to 2.3%yr from 2.6%yr. These key policy sensitive rates are not presenting a threat to the RBA's inflation target.

"A 1.2%qtr rise is estimated in the seasonally adjusted CPI", says Westpac.

Behind the stronger headline CPI print are, the rebound in petrol from late Q1 through Q2 and into early Q3, a solid bounce in fruit & vegetable prices (4.5%qtr), and solid gains in medical & hospital services. Housing costs continue to rise (0.5%qtr) and this quarter household contents & services also gained (1.1%qtr).

The offsets this quarter were relatively modest outside of pharmaceuticals and domestic holiday travel, with audio visual & computers continuing to fall as did communication costs.