Australia’s trimmed mean inflation trajectory hits 3.8% in Q2, reinforcing Westpac’s hawkish stance amid persistent services and housing costs.
Westpac kept its forecast for an August Reserve Bank of Australia rate hike after May CPI data signaled trimmed mean inflation accelerating to 3.8% by the end of Q2. The bank highlighted sticky services inflation, including hairdressing and housing costs, as structurally persistent risks beyond transitory energy shocks.
The six-month annualized trimmed mean rose to 3.5% from 3.2%, indicating underlying inflation momentum is building rather than stabilizing. Housing inflation, accounting for 20% of the CPI basket, posted its strongest monthly gain since December 2022, further complicating the RBA’s policy outlook.
Wage pressures in market services, expected to intensify in the second half, extend inflation risks beyond the August meeting. Westpac’s analysis distinguishes between reversible pass-through effects and entrenched cost pressures, aligning it with the most hawkish forecasters.