Australia Inflation Q2 2022

Australia

Australia: Inflation at over three-decades high in Q2

July 28, 2022

In the second quarter of 2022, consumer prices soared 1.8% over the previous quarter, following Q1’s 2.1% jump.

Annual inflation came in at 6.1% in Q2, up from Q1’s 2.1%, hitting the highest reading since Q4 1990. Therefore, inflation moved further above the Reserve Bank’s 2.0%–3.0% target band.

Commenting on the short-term implications for monetary policy, Lee Sue Ann, economist at UOB, stated:

“Our current full-year inflation forecast of 5.0% remains, underscoring the RBA’s rapid tightening cycle since May that lifted the cash rate to 1.35% from 0.10% as it tries to ensure inflation expectations remain anchored around its 2-3% target. While today’s readings came in slightly slower than expected, the 6.1% y/y reading is still above the RBA’s forecast in May of 5.5%. This is why we are anticipating another 50bps hike in the OCR at the upcoming 2 Aug meeting. We then see the RBA slowing to 25 basis points increments.”

Our panelists see inflation averaging 4.5% in 2022 and 3.3% in 2023.


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