The CPI data from Australia is almost here, and it seems that major banks and researchers are also releasing their respective forecasts. According to market consensus, the Australian Consumer Price Index is expected to be around 7.4% for the month of October. If we look at the inflation data from September, it was around 7.3%.
Before the release of the actual Australian CPI data, let's look at the forecast from three major banks:
According to the analysts at Westpac, the CPI reading is expected to be around 7.3%. According to them, the inflation's annual pace is close to peaking in Australia. That's why they believe that in 2023, it will become more moderate with some monthly volatility as usual.
According to the experts at ING, the Australian CPI will be close to the recent readings we are getting on a month-by-month basis. Based on this analysis, the inflation data will be somewhere around 7.3%. They also mentioned that the 7.3% reading is the peak, and we will go down from here.
According to NAB, there are many factors that will make the inflation turn higher such as rent, airfares, and fuel prices. So they believe that the inflation reading will be 7.7%.
There is no doubt that the central bank of Australia will be closely watching the CPI data for October. And if the inflation turns out according to the expectations, then it would mean that RBA will continue to raise interest rates in the short term.
That's why we believe that a rate hike of 25 bps is highly likely in December, February, and the month of March. Overall, this will raise the interest rate to a total of 3.60%.
On the contrary, if the inflation cools down, then it would mean that RBA can stop the rate hike cycle and start thinking about normalizing its policy rate.