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CPI Forecast Australia: Inflation has peaked - Here's what's next | RateCity

Mark Bristow avatar
Mark Bristow
- 4 min read
CPI Forecast Australia: Inflation has peaked - Here's what's next | RateCity

Inflation is affecting every aspect of Australian finances at the moment, from the cost of lettuce to home loan interest rates. So, what’s next for inflation now that it has reached its peak? We checked what some of Australia’s leading financial institutions had to say in their forecasts.

The Australian Bureau of Statistics (ABS) 

According to the ABS, inflation already reached a peak at the end of 2022, with recent figures continuing a downward trend.

The ABS releases the Consumer Price Index (CPI) four times a year, covering the March, June, September, and December quarters. This measures household inflation based on changes to the price of a basket of goods, among other factors. Additionally, the ABS began releasing a monthly CPI indicator in October 2022.

On an annual basis, CPI inflation increased 6.0% in the June 2023 quarter, which is lower than the rises of 7.0% in March 2023 and 7.8% in December 2022. Trimmed mean annual inflation, which excludes large price rises and falls, was 5.9%, lower than the March 2023 quarter’s 6.6% and the December 2022 quarter’s 6.9%.

The monthly CPI indicator rose 5.4% in the year to June 2023, which is lower than the 5.5% movement in May and the 6.7% movement in April.

ABS head of prices statistics, Michelle Marquardt, said that the latest annual CPI movement was the lowest quarterly rise since September 2021, adding that, “While prices continued to rise for most goods and services, there were some offsetting price falls this quarter including for domestic holiday travel and accommodation and automotive fuel.”

The Federal Government

According to Federal Treasurer Jim Chalmers, it is “really pleasing” to see that Australia’s inflation is moderating further, though he’d like to see it moderate faster.

“There is still a long way to go to head off this inflation challenge but today’s numbers do show that we’re heading in the right direction… We’re seeing it moderate and we’d like it to moderate quicker but our economic plan is playing a really important role here in the moderation of inflation.”

The Treasury’s three-point plan to help Australia manage inflation involves banking a bigger surplus, providing cost-of-living help, and focusing on supply-side challenges.


ANZ Research said that the RBA will likely find comfort in the latest CPI release, which could indicate that the current monetary policy is already tight enough:

“The sharp drops in headline and core CPI and in non-tradables and services inflation, the latter two both printing 0.8% q/q in Q2, highlight that a 4.1% cash rate may be restrictive enough to bring inflation down.”

Commonwealth Bank 

Economists from the Commonwealth Bank have said that the latest CPI figures are confirmation that the Australian economy’s inflation pulse is tracking in the right direction.

“Inflation expectations in Australia continue to be worth watching even as the rate of headline inflation falls.”

Based on these findings, Commonwealth Bank expects inflation to reach just below 4% by the year’s end.


NAB economists have described the recent inflation figures as slightly softer than both market and RBA forecasts, though some ‘sticky’ CPI segments could keep inflation from falling faster.

“We still see Q3 CPI as printing high given likely pass through from the minimum/award wage increase, higher energy prices, as well as well-telegraphed price increases in other services components. The concern remains on services inflation, which could impede the aim of getting inflation back to 3% by mid-2025.”


Westpac economists described the recent CPI results as a surprise to the downside, indicating that the pace of inflation is moderating in a meaningful way.

“Overall, we have to recognize that the overall momentum in the monthly CPI Indicator is softer than we had been expecting. This is something we are watching closely for if it continues, it would suggest downside risk to our current inflation forecasts.”

Westpac’s current target is for core inflation to get back to around 4.1% for the end of 2023. According to Westpac economists, there’s a good chance that inflation will come to the end of this year somewhat lower than the RBA is currently expecting.


The recent inflation figures came back lower than AMP had previously estimated, having forecast a 1% rise in headline consumer prices, taking annual growth to 6.2%, compared to the ABS results of 0.8% and 6.0%.

However, AMP economists also warned against declaring victory against inflation, stating that there is “a risk that the weakening in inflation could prove to be temporary if consumer spending rises again as real wages growth rises.”

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Product database updated 25 Jun, 2024

This article was reviewed by Personal Finance Editor Alex Ritchie before it was published as part of RateCity's Fact Check process.