Focus on the monthly numbers
The consensus for Australian inflation is still transitioning to the new monthly series, which is why there is a disconnect between the outcome relating to the old, quarterly series, and the new, more timely monthly numbers. While both inflation rates dropped sharply, the March monthly inflation outcome of 6.3% YoY, undershot the median expectation for a 6.5% inflation rate. In contrast, the quarterly inflation rate for 1Q23, dropped from 7.8% to 7.0%, slightly ahead of the 6.9% consensus.
The reason for this discrepancy seems to be that many forecasters are still not producing forecasts for the monthly series, which is curious, as it is more timely, and more instructive than quarterly figures, which are already looking very dated at the time of publication. Almost twice as many forecasters delivered a quarterly prediction as those for the monthly series. And it appears that those that did produce the monthly forecasts are still finding their feet when it comes to the numbers, and were much more accurate with the old quarterly series. This will change.
Our focus is on the more up-to-date monthly figures. The market seems to concur. The AUD weakened in the immediate aftermath of the data, and 2Y bond yields were also down.
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