The combination of stronger economic and wage growth, together with probably looser fiscal policy, is taking place against the backdrop of an inflationary outlook. This is dominated by the fall in food prices from the end of last year and the redirection of the ODA to the government budget. As a result, headline consumer inflation is expected to slow to 1.7% yoy this year from 2.5% this year and we expect it to accelerate slightly to 2.3% in 2027, but with a possible risk of slower growth due to the abolition of concession fees. However, for core inflation, we expect a more modest slowdown to 2.5% this year from 2.7% last year and 2.3% in 2027.
Source of primary data
CZSO, CBA
Note
"Actual" and "CBA forecast" represent the full-year average and "actual ytd" is the average for the year to date. Data unadjusted for working day differences and seasonal effects. The dashed line 'middle band of 25-75% of forecasts' represents the middle half between the 25th and 75th percentile of all forecasts in the CBA consensus.