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Taylor Nugent

Taylor Nugent

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In this Weekly, we look at some of the key risks around the Australian inflation outlook in the context of measured inflation turning higher globally.

We are unlikely to get a true read of the underlying pace of inflation until mid-2022, with both transitory and policy driven impacts continuing to play out.

For Australia, population growth should begin to recover when international borders are re-opened (latest guidance is from mid 2022).

The NSW and Victorian outbreaks remain stubbornly high in the face of strict lockdown measures, renewing focus on vaccinations as the path forward. The vaccination rollout is finding its gear, led by a sharp acceleration in NSW, putting the rollout on track to meet reopening thresholds by November.

Strong US Payrolls print, cementing expectations of a taper announcement at an upcoming FOMC meeting (September, November or December). As tapering becomes more certain, market focus will quickly change to the likely rate hike profile. Recent speeches by Fed Vice-Chair Clarida and Governor Brainard hint how this will evolve.

The Sydney lockdown is in its fifth week and looks set to be extended well beyond July 30. Given the high transmission rates of the delta variant, snap lockdowns are likely to remain a ‘tool of first resort’ in controlling the virus until vaccination rates lift.

Q2 CPI is just under four weeks away (on Wednesday July 28). In this week’s Weekly we have a first look at what CPI may print and highlight why we believe Core CPI is likely to remain subdued despite the pick-up seen in core inflation in the US, NZ and Canada.

Things were better in the old days

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