Brisbane development veteran Kevin Seymour's Seymour Group is set to deepen its presence on one of Brisbane's most tightly held riverfront addresses, lodging revised plans for a luxury apartment development on Oxlade, just a few doors down from The Oxlade, which it completed in 2024.

The <a href="https://www.apartments.com.au/new-apartments/70-72-oxlade-drive-new-farm-qld-4005">new project at 70-72 Oxlade Drive</a>, directly north of The Oxlade, will have 27 apartments across a seven-storey building&nbsp;overlooking the Brisbane River and Merthyr Park. It's a revision from a 2021-approved design.

Designed by bureau^proberts, the project has evolved from the previously approved 26-apartment scheme, introducing an additional penthouse level while maintaining a low-density, boutique character. The development will comprise 26 three-bedroom apartments and a single four-bedroom penthouse, supported by two basement levels with 86 car spaces and 34 bicycle spaces.

The architectural response is centred around two distinct building forms separated by a landscaped open-air atrium.&nbsp;"This dual composition captures and embraces Brisbane’s subtropical environment whilst breaking down built form and scale," the submission to the Brisbane City Council noted.

<img alt="First look: Seymour Group returns to Oxlade Drive with revised riverfront apartment plans in New Farm" data-entity-type="file" data-entity-uuid="c12d84d0-bc11-4067-b46f-5bd2d786a34d" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/new%20farm%20landscape.png?VersionId=YEPc2k5CAdh6aAPlu4uVpgZadh4MEfRd" />

A defining feature of the design is a deep landscaped void running through the centre of the building, creating what bureau^proberts describes as a "natural ravine" that enhances airflow, daylight penetration and resident amenity. The design report notes that the separation of the two building volumes is intended to maximise natural light, cross-ventilation and outlook while strengthening connections to the surrounding riverfront setting.

Curved balcony edges, integrated planting and extensive landscaping throughout the façade reinforce the subtropical design approach. The building's façade is softened by elevated gardens and planter beds, creating a green edge that complements the established landscape character of Oxlade Drive and neighbouring Merthyr Park.

New Farm has become one of Brisbane's most sought-after suburbs for developers delivering premium downsizer-focused apartments.

GRAYA has been particularly active in the precinct, completing both Chalk and York in recent years, while construction of Moray House, being delivered for Spyre, is now nearing completion. Architect-turned-developer Joe Adsett recently launched <a href="https://www.apartments.com.au/new-apartments/arcilla-new-farm-by-joe-adsett-28-maxwell-street-new-farm-qld-4005">Arcilla on Maxwell Street</a>, an exclusive collection of just nine apartments.

Joel Robinson

First look: Seymour Group returns to New Farm's Oxlade Drive with riverfront apartment plans

A new residential tower will be the first piece of a broader mixed-use precinct set to reshape a prominent Newcastle West site, with local developer <a href="https://www.apartments.com.au/developers/gwh">GWH</a> bringing its <a href="https://www.apartments.com.au/new-apartments/cambridge-quarter-newcastle-west-12-denison-street-newcastle-west-nsw-2302">Cambridge Quarter</a> vision to market.

The first release, Tempo, will introduce 87 apartments across a 24-storey tower, marking Stage 1 of the residential component of a larger urban regeneration project planned for the western end of Newcastle's city centre, encompassing the former Cambridge Hotel site.

Positioned on Denison Street, Tempo has been designed as the inaugural building within Cambridge Quarter, a precinct that will ultimately combine apartments, retail activation and revitalised public spaces including the revamping of the Cambridge Hotel.

[smartcode_project:default project_id=135876 project_image_fid=368856]

The tower will comprise a mix of one, two and three-bedroom apartments, including layouts with multipurpose rooms, catering to a broad cross-section of owner-occupiers. Apartment sizes range from around 60 sqm to 192 sqm, with a number of residences oriented to capture views across Newcastle Harbour, the city skyline and coastline.

GWH has emphasised liveability in the design, with open-plan layouts extending to generous balconies and terraces. Residents will have a choice of two interior palettes, while specifications include engineered stone benchtops, SMEG appliances, full-height bathroom tiling and secure building access. Premium upgrade packages will also be available

Multiple rooftop resident retreats will provide communal outdoor space overlooking the harbour and city, offering an elevated amenity layer above the activity of the precinct below.

[smartcode_project:default project_id=135876 project_image_fid=368851]

The broader Cambridge Quarter vision extends beyond the residential tower itself. Ground-level retail activation and landscaped public areas are planned throughout the precinct, creating a walkable neighbourhood environment connected to the surrounding renewal of Newcastle West. The Cambridge Hotel is also earmarked for future redevelopment into a family-friendly hospitality venue integrated with the new precinct.

The project is strategically positioned within walking distance of Newcastle Interchange, providing access to light rail, regional rail services and direct connections to Sydney. Residents will also be close to Honeysuckle, Newcastle Harbour and the city's beaches and coastal walkways.

[smartcode_project:default project_id=135876 project_image_fid=368852]

For GWH, Cambridge Quarter represents one of its most significant Newcastle developments to date. The locally based developer, which has operated in the Hunter region since 1995, describes the project as a new chapter in the ongoing transformation of Newcastle West.

GWH Executive Director Jonathan Craig said the project had been shaped by a focus on creating lasting community connections.

"We take pride in creating places that last. Spaces where people feel connected, comfortable and a genuine sense of belonging," Craig said.

"Cambridge Quarter is something we are truly proud of, a place shaped by local knowledge, built with care and designed to be part of Newcastle's next chapter."

[smartcode_project_cta:default project_id=135876]

GWH unveils first release at landmark Cambridge Quarter precinct in Newcastle West

<a href="https://www.apartments.com.au/developers/ss-projects">S&amp;S Projects</a>,&nbsp;Rainbow Bay's busiest developer,&nbsp;has officially lodged plans for the largest development in its booming local portfolio, seeking approval for a further 88 apartments on Boundary Street.

The proposal&nbsp;at <a href="https://www.apartments.com.au/new-apartments/209-213-boundary-street-coolangatta-qld-4225">209–213 Boundary Street, Coolangatta</a>,&nbsp;marks the next chapter in the developer's transformation of the southern Gold Coast beachside precinct. It will be its fifth in the area, having already delivered Flow, Awaken and Esprit, while construction continues on the 38-apartment Radia. The new project would rise 57 metres above a consolidated 1,518 sqm site, on the same street as Radia and Esprit.

&nbsp;

Designed by <a href="https://www.apartments.com.au/architects/cottee-parker-architects">Cottee Parker</a>, the proposed development comprises 88 two and three-bedroom apartments across a contemporary podium-and-tower form that integrates extensive landscaping from street level through to the rooftop.

The tower would be delivered above a basement and multi-level podium accommodating resident and visitor parking, with the residential component commencing from level three. The design incorporates cascading planting throughout the façade, landscaped podium edges, and deep planting zones along the Boundary Street frontage.

<img alt="First look: S&amp;S Projects lodges plans for 88-apartment wellness tower at Coolangatta's Boundary Street" data-entity-type="file" data-entity-uuid="677e6615-b5c0-4b6c-b4f9-efb14fcde1a6" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/ss%20da%20pers.png?VersionId=YOnPKQm7IFXv0M5H326djEpxk80500Hi" />

A key feature of the development is its expansive rooftop wellness and recreation precinct. Plans reveal a resort-style pool deck, gymnasium, sauna, steam room, hot and cold plunge pools, rooftop terraces, barbecue areas and landscaped relaxation spaces positioned to capture views across the southern Gold Coast coastline.

The rooftop wellness focus builds on the vision S&amp;S Projects first outlined when it acquired the site for $20.25 million last year.

"We are taking every advantage to create a truly unique rooftop wellness experience with a natural feel for residents, offering stone features throughout and an underlying theme that emulates a botanical garden," S&amp;S Projects founder and director Paul Gedoun said at the time.

The proposal seeks a 57-metre building height, representing a 50 per cent uplift on the site's mapped 38-metre height limit. Planning documents argue the additional height is consistent with recently approved and emerging towers in the immediate Boundary Street and Rainbow Bay precinct.

Urbis, acting as planning consultant, said the development would provide "88 dwellings, comprising a mix of two and three-bedroom apartments, contributing to housing choice and supply within an established medium to high-rise coastal urban neighbourhood."

The scheme has undergone extensive pre-lodgement consultation with the City of Gold Coast, with the design refined following feedback relating to architectural expression, landscaping, traffic access and podium treatment.

<img alt="S&amp;S" data-entity-type="file" data-entity-uuid="0a2d70fd-62ac-4b83-97c6-b798fc1243dd" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-05%20at%209.16.31%E2%80%AFAM.png?VersionId=yHmghUwKM3IVGpBktQU1mE.0Lpf3WimG" />

The architectural team is led by Brisbane-based Cottee Parker, one of Australia's most active residential design studios, with landscape architecture by Dunn + Moran. The consultant team also includes ADG Engineers, Windtech and Acoustic Works.

S&amp;S Projects has become one of the most influential private developers operating on the southern Gold Coast. Since entering Rainbow Bay in 2022, the company has assembled a portfolio exceeding $1 billion in end value, establishing itself as a key player in the area's evolution into a premium apartment destination. Pezet Matheson will again handle the sales for S&amp;S.

Coolangatta is entering another wave of apartment development, following the delivery of several prominent residential projects in recent years.

John Kearney's Immerse Projects will launch&nbsp;<a href="https://www.apartments.com.au/new-apartments/kaiya-kirra-beach-5-haig-street-coolangatta-qld-4225">Kaiya on Haig Street</a>&nbsp;soon, meanwhile, Palm Beach-based Sherpa Property Group is preparing to bring its debut Coolangatta development, <a href="https://www.apartments.com.au/new-apartments/flourish-viver-87-griffith-street-coolangatta-qld-4225">Flourish Viveré</a>, to market later this year, subject to approvals.

First look: S&S Projects proposes 88-apartment wellness tower at Coolangatta's Boundary Street

A landmark former orphanage site in Surrey Hills could be transformed into a new residential community under plans lodged by <a href="https://www.apartments.com.au/developers/antipodean-land-developments">Antipodean Land Developments</a> that would deliver 76 apartments and townhouses while restoring some of the suburb's most significant heritage buildings.

The burgeoninng Melbourne-based developer has submitted plans for the 9,158 sqm site at 1 Kent Road and 24 Durham Road, home to the former St Joseph's Home for Destitute Children, a historic institutional complex dating back to the late 19th century. The proposal seeks to adaptively reuse several heritage buildings while introducing two new four-storey residential buildings set within extensive landscaped grounds.

Designed by <a href="https://www.apartments.com.au/architects/woods-bagot">Woods Bagot</a> and Kerstin Thompson Architects, the project has been conceived as a contemporary residential village embedded within a restored heritage precinct. The development team describes the design approach as "The Village in the Garden," with new buildings positioned among mature landscaping by OCULUS and significant heritage structures.

<img alt="First look: Antipodean Land Developments plans heritage-led apartment community in Surrey Hills" data-entity-type="file" data-entity-uuid="44ec8c1b-c0b6-44ae-859e-5811b3e6a023" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Untitled%20design%20%281%29.png?VersionId=p.p1_KFh4iQoV4nisdnPfQBAsWNi7m79" />

The proposal would deliver 76 dwellings comprising a mix of apartments and duplex-style residences, significantly increasing housing supply on one of the largest privately held residential landholdings in Surrey Hills. The development includes 127 car spaces, 24 bicycle spaces and more than 1,000 sqm of communal amenity, with the existing chapel building earmarked for conversion into resident facilities.

According to the planning submission, the project centres on the restoration and adaptive reuse of the site's most significant heritage assets, including the original c.1889 St Joseph's building, the chapel designed by architect Augustus Andrew Fritsch, and the historic brick perimeter walls and entry gates. The proposal also incorporates the retention of other contributory buildings including the former infirmary and school building.

Tract Consultants, in the planning report accompanying the application, said the scheme had been shaped through extensive heritage analysis and design development.

"The shared vision for the Site by the project team has culminated in a scheme which successfully breathes life back into a historic site while delivering upon the objectives of Victoria's Housing Statement in a carefully curated and contextually responsive manner."

<img alt="First look: Antipodean Land Developments plans heritage-led apartment community in Surrey Hills" data-entity-type="file" data-entity-uuid="7263b7d8-95ea-400f-9531-6ca7d22c3c33" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Untitled%20design%20%282%29.png?VersionId=4cR1tiWOsDpgxEOwZi5vVFcyvvOsYkIE" />

The proposal is being assessed under Victoria's Significant Residential Development with Affordable Housing pathway. As part of the application, three per cent of the project's residential development cost would be contributed to the Social Housing Growth Fund. The development would also provide a diverse mix of one, two and three-bedroom residences targeting a broader range of buyers than typically found in Surrey Hills' detached housing market.

Sustainability initiatives include an anticipated 66 per cent BESS score, natural cross-ventilation to 80 per cent of apartments, 28 per cent deep soil landscaping and a canopy cover outcome exceeding local planning requirements. The proposal also sets aside more than 1,083 sqm for communal indoor and outdoor resident amenity spaces.

<img alt="First look: Antipodean Land Developments plans heritage-led apartment community in Surrey Hills" data-entity-type="file" data-entity-uuid="33fad46f-fe26-4d0a-acfd-6b776e1c6a3d" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Untitled%20design.png?VersionId=D9F6WVSyYCtGvSUmith35LRp6R7PQkw_" />

Planning documents describe the property as one of the largest underutilised residential sites in Surrey Hills, arguing it presents a rare opportunity to introduce "missing middle" housing in an established inner-eastern suburb while preserving and revitalising a significant heritage precinct.

Antipodean Land Developments has built a reputation for design-focused residential projects across Melbourne, particularly in the medium-density sector. Previous developments include Neighbourhood in Brunswick East, delivered with Breathe Architecture, and Balfe Park Lane, designed by Kerstin Thompson Architects.

They've been very active in site acquisition as they build out their future development pipeline. They recently launched Thornubury House, 45 apartments above a mix of commercial, retail, and food and beverage tenancies, and have plans for a boutique project in Fitzroy and another <a href="https://www.apartments.com.au/news/vic/antipodean-plan-apartments-for-deepdenes-missing-middle-on-whitehorse-road">"missing middle" project</a> on Deepdene's Whitehorse Road.

First look: Antipodean Land Developments plans heritage-led apartment community in Surrey Hills

Developer <a href="https://www.apartments.com.au/developers/auyin-property-development">Auyin</a> is the latest to turn to the Victorian Government's Development Facilitation Program in an effort to secure approval for its long-planned, mixed-use project in Elsternwick.

In 2018, Auyin lodged plans with Glen Eira City Council for a 14-storey building, however Council approved a reduced eight-storey scheme. A subsequent VCAT appeal in 2019 upheld the eight-storey height limit.

The project was later amended to nine storeys, but Auyin is now seeking to revive something closer to its original vision. The developer argues that the planning context has evolved significantly over the past decade, particularly within the Elsternwick Activity Centre, where higher-density development has increasingly been encouraged along Glen Huntly Road.

The proposal would transform the 1,239 sqm site at <a href="https://www.apartments.com.au/new-apartments/7-12-horne-street-elsternwick-vic-3185">7-15 Horne Street</a>, opposite Elsternwick Railway Station, into a 13-storey residential and retail development designed by CBG Architects, with 40 apartments

The site currently comprises three commercial properties.

<img alt="First look: 13-storey mixed-use tower planned for Elsternwick activity centre" data-entity-type="file" data-entity-uuid="5f465dd4-509b-4082-a669-0253b313914b" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/elsternwick%20podium.png?VersionId=72frWi0SmQ5AVJ3ARRhX5ILUYObhTm7x" />

The proposed apartment mix comprises 25 two-bedroom and 15 three-bedroom residences above 200 sqm of retail space at ground level. Residents would have access to a 90 sqm wellness facility, a 351 sqm communal indoor and outdoor terrace on the third level, and extensive landscaped areas throughout the development. A publicly accessible 135 sqm plaza would be created on the north-east corner of the site, providing seating, landscaping, and a new gathering space adjoining Horne Street.

The design adopts a four-storey podium that references the finer-grain character of the surrounding streetscape, with the upper tower recessed behind generous setbacks on all boundaries.

<img alt="First look: 13-storey mixed-use tower planned for Elsternwick activity centre" data-entity-type="file" data-entity-uuid="e637e763-2abc-4c34-a0aa-5c7ad36fae18" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/elsternwick%20open.png?VersionId=J1AoOpZgTyaF.KeeFSX6lMjEScX8KKRi" />

A key element of the proposal is the reconfiguration and widening of the surrounding laneways. Vehicle access would be retained from Lois Lane, with upgraded pedestrian connections linking Ross Street and Horne Street. The development would provide 58 residential car spaces, two retail car spaces, and 52 bicycle spaces across two basement levels and ground-floor facilities.

Architecturally, the building draws inspiration from the established character of Elsternwick Village. The façade combines dark charcoal brickwork, textured concrete, bronze-toned metal detailing, and extensive planting integrated into podium and tower levels. The design also incorporates a chamfered corner treatment and publicly accessible plaza intended to strengthen pedestrian activity around the station precinct.

Elsternwick's last new development completion was&nbsp;EVA Elsternwick by Pitard late last year. <a href="https://www.apartments.com.au/developers/milieu-property">Milieu</a> is working away on its nature-led neighbourhood, <a href="https://www.apartments.com.au/new-apartments/elsternwick-gardens-by-milieu-8-gordon-street-elsternwick-vic-3185">Elsternwick Gardens</a>, on Gordon Street, with its first stage expected to complete next year.

First look: Auyin seeks mixed-use apartment project in growing Elsternwick Activity Centre

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<div class="column">EXPERT OBSERVATION</div>
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<div class="column">The CPI was 0.6% in the June quarter compared to the market median (and Westpac’s) forecast for 0.5%. The annual rate lifted to 1.6% from 1.3%.</div>
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<div class="column">The average of the core measures, which are seasonally adjusted and exclude extreme moves, rose 0.4% in the June quarter/1.4% over the year. In the quarter, the trimmed mean gained 0.42% while the weighted median lifted 0.37%.</div>
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 Incorporating revisions, the six month annualised growth in core inflation was flat at 1.3% over the year well below the bottom of the RBA target band and the slowest pace since March 1999.</div>
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 Standouts in the quarter were: on the positive or high side of expectations, clothing &amp; footwear which suggests we are starting see some impact from the AUD depreciation, stronger transports cost which was not just due to a jump in fuel prices but also a surprising 1.4% bump in automotive prices while the seasonal fall in pharmaceuticals was smaller than the historical norm.</div>
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<a href="https://www.propertyobserver.com.au/images/2019/8/1/CPI.jpg" target="_blank">Click here</a> to enlarge: </div>
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<div class="column">Source: Westpac</div>
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 Prices that fell or where on the low side of expectations – tobacco prices surprised with a fall, housing was flat on falling house purchases and utilities, household contents fell more than expected while health rose less than expected and recreation fell more than expected.</div>
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 Food prices fell as expected, with falling fruit &amp; vegetable prices more than offsetting rising prices elsewhere. For now, the impact of the drought has been limited but we are watching this space closely as it extends in length and depth.</div>
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 It is worth noting the lack of inflationary pulse in housing. Overall housing costs fell a little more than expected as falling dwelling prices combined with falling electricity prices and flat rents. This moderation in housing costs is central to our outlook for low non- tradable and core inflation.</div>
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 In nine of the ten quarters to the 2019 Q1, inflation forecasters overestimated the quarterly rise in the CPI by 0.12ppts. Including Q2 analysts’ have now underestimated the quarterly print for the CPI in two quarters of the last three quarters. This suggests that the disinflationary pulse may be fading, if not coming to an end.</div>
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<div class="column">Source: Westpac</div>
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 There are still some embryonic indicators that retail, in particularly clothing &amp; footwear, furniture &amp; appliances as well as motor vehicles, are turning modestly inflationary due to the AUD depreciation.</div>
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 However, housing has a significant weight in the CPI (22%) so it has a meaningful impact on both headline and core inflation. As such, it is hard to find any near- term risk of a meaningful acceleration in inflation.</div>
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 Our preliminary estimate for Q3 CPI is 0.4% in the quarter/1.6% over the year for headline and 0.3% in the quarter/1.5% over the year for the trimmed mean.</div>
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Waiting for Godot has ended its long run
In the December quarter 2018, for the first time in two year the quarterly rise in the CPI exceeded market expectations. However, the first quarter of 2019 saw a return of a disinflationary pulse with the CPI print coming in under expectations with a flat print. 
Then it was reversed again in the June quarter with the CPI rising 0.6% vs. a median expectation for 0.5%.
 Including Q2 analysts’ have now underestimated the quarterly print for the CPI in two quarters of the last three quarters. This suggests that the disinflationary pulse may be fading, if not coming to an end.
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ABS confirms June quarter negative seasonality
As noted in our preview the June quarter 2019 was expected to be a seasonally soft quarter. 
However, on the estimates from the March quarter the estimated seasonal adjustment was +0.2ppt. 
In the June quarter release the seasonally adjusted CPI rose 0.7% so the seasonal adjustment factor was a smaller 0.1ppt. 
Revisions to the seasonal factors are a regular occurrence with the ABS conducting concurrent seasonal reanalysis.
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For core inflation, the trimmed mean lifted 0.4% in the quarter
The average of the core measures, which are seasonally adjusted and exclude extreme moves, rose 0.4% in the June quarter. 
In the quarter, the trimmed mean gained 0.28%/1.6%yr while the weighted median lifted 0.37%/1.2%yr. 
The annual pace of the average of the core measures printed 1.4%, a very modest deceleration from the 1.5% pace in the March quarter.
Incorporating revisions, the six month annualised growth in core inflation was flat at 1.2% over the year, holding well below the bottom of the RBA target band and the slowest pace of core inflation since March 1999.
For a broader core inflation measure, more in line with some international measures, market sector goods and services excluding volatile items rose 0.5% in the quarter with the annual pace lifting to 1.8% from 1.6%.
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We are yet to see the full inflationary impact of the drought
Food prices came as expected at 0.4% decline. Fruit &amp; vegetables fell slightly more than expected (2.8% vs 2.1%). 
Alcohol &amp; tobacco was slightly stronger (1.1% vs. 1.0%) with tobacco having a robust 2.4% rise following a surprising 0.7% in Q1.
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A surprising bump up in car prices
Transportation rose 3.4% vs. 2.9% expected as car prices lifted 1.4% vs. our expectation for a 1.0% fall. 
Car prices are now up 3.4%yr, the fastest pace of growth since June 2020 and another sector we would expect to see the impact of the weaker AUD. 
However, the rise in car prices is more than what you would expect given the weakness of the AUD in either TWI terms or against the Japanese Yen.
Clothing has a larger than expected bump highlighting AUD pass-through...
Clothing &amp; footwear was stronger than expected rising 1.6% vs. our 0.5% expected. We are now seeing some pass through of the weaker AUD but the impact has not been uniform across this sector. 
Male garments are up 4.8% over the year while garments for women are down 0.2%. Footwear is down 1.1% over the year while accessories are down 1.0%.
...as does the rise in household contents &amp; services.
An area where the downside pressure on prices has been significant was household contents &amp; services. 
In the June quarter they rose 0.7% vs. our expectation for a 0.5%. There has been a turnaround in the trade exposed components with furniture prices up 2.8% over the year and household appliances up 5.1%.
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However, it is not all one way with textiles down 0.5% over the year and glassware down 4.1%. All up household furnishings are down just 0.4%, the softest deflationary pace since March 2018.
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Housing reveals signs of the housing correction in Vic and Qld, not so strong in NSW
The slightly softer than expected housing print reflected the fall in dwelling prices (0.2% vs. our forecast for a flat print – this reflected a further fall in Victorian dwelling prices of 0.4% in the quarter,  a larger 0.6% fall in Brisbane and a more modest 0.1% fall in NSW).
Rents were flat as expected while utilities fell more than expected (1.0% vs. 0.4% forecast) due to a 1.7% fall in electricity prices.
<a href="https://www.propertyobserver.com.au/images/2019/8/1/dwelling.jpg" target="_blank">Click here</a> to enlarge:
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/8/1/dwelling.jpg" alt="">
There remains a significant near term negative risk around dwelling purchases prices in NSW.
 Prices are already falling in Victoria while rents have flattened in NSW. Given that rents and dwelling purchases together are worth around 15% of the CPI, this is a significant risk for headline inflation, and even more so for the core measures where the weight is somewhat higher.
<a href="https://www.propertyobserver.com.au/images/2019/8/1/narrow%20turnaround.png" target="_blank">Click here</a> to enlarge:
<img src="https://www.urban.com.au/images/2019/8/1/narrow%20turnaround.png" alt="">
Tradables stronger while non-tradables had a modest rise
Tradables rose 1.2% in the June quarter. Tradable goods rose 1.2% due to automotive fuel (10.2%). Tradable services rose 2.5% due to international holiday, travel and accommodation (2.7%).
Non-tradables rose 0.2% in the June quarter. Non-tradable goods rose 0.2% due to tobacco (2.4%). Non-tradable services rose 0.3% due to medical and hospital services (2.6%).
Looking forward inflation holds below the band
There are signs that we are getting some AUD deprecation pass-through to inflation in clothing &amp; footwear (for some selected groups) and in automotive vehicles. But it is harder to find any broader impact or wider inflationary pulse.
As housing has a significant group weighting in the CPI (22%) it has a meaningful impact on estimates of both headline and core inflation. As such, with core inflation below the bottom of the RBA’s target band we can find little to suggest any risk of a meaningful acceleration.
With crude oil prices easing there has been a turnaround in fuel prices which are expected to be a drag in Q3. Our preliminary estimate for the June quarter 2019 CPI is 0.4% which would see the annual pace steady at 1.6%.
Our preliminary estimate for the trimmed mean in the September quarter CPI is 0.3% seeing the annual pace ease a touch to 1.5%.
<a href="https://www.propertyobserver.com.au/images/2019/8/1/inflaction%202.jpg" target="_blank">Click here</a> to enlarge: 
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Justin Smirk is ‎senior economist, Westpac Group and can be contacted <a href="https://www.westpac.com.au/about-westpac/westpac-group/" target="_blank">here</a>.
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j.ballantyne1990-6AQqhLzZaK

Q2 CPI: Some AUD pass-through but housing is the anchor on inflation - Justin Smirk

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EXPERT OBSERVER
The Consumer Price Index – the main measure of inflation in Australia – rose by 0.6 per cent in the June quarter, above expectations.
In seasonally adjusted terms the CPI rose by 0.7 per cent. The annual rate of headline inflation lifted from 1.3 per cent to 1.6 per cent. The Aussie dollar rose by almost a quarter of a cent against the greenback in response.
The Reserve Bank monitors three measures to derive the underlying inflation rate. The trimmed mean rose by 0.4 per cent in the June quarter (1.6 per cent annual); the weighted median rose by 0.4 per cent (1.2 per cent annual) and the CPI less volatile items rose by 0.3 per cent (1.5 per cent annual). Overall, underlying inflation rose by around 0.4 per cent in the quarter and by around 1.5 per cent over the year. Market goods and services less volatile items rose by 0.5 per cent in the quarter to be up 1.6 per cent on the year.
Automotive fuel (+10.2 per cent), medical and hospital services (+2.6 per cent) and international holiday travel (+2.7%) recorded the most significant price gains. The most significant offsetting price falls this quarter are fruit (-4.1 per cent), electricity (-1.7 per cent) and domestic travel (-1.5 per cent).
<h1>What does it all mean?</h1>
- Inflation remains contained. But we can never claim that the inflation dragon is dead, rather resting. Higher fuel prices can be passed through in terms of higher taxi and public transport fares as well as freight and courier prices. Weather events like the current drought in eastern Australia can push up prices of supermarket goods as well as café, restaurant and takeaway food prices. The high activity in infrastructure building can put upward pressure on construction sector wages, in turn lifting prices of newly-built dwellings.   
- Clearly fuel and food prices are volatile. Fuel lifted 10.2 per cent in the June quarter, but over the past month, petrol is down by 3 per cent.
- If we are looking where future inflation pulses can come from, fuel prices, weather events, administered prices (such as utilities and child care), the exchange rate, construction and wages are the things to watch.
- Headline inflation has averaged 1.7 per cent over the past five years and averaged 2.1 per cent over the past decade. So clearly inflation remains below ‘normal’ levels and certainly still below the Reserve Bank’s 2-3 per cent target band.
- The key underlying measures of inflation rose 0.3-0.5 per cent in the June quarter. Even if the latest results were annualised, inflation would be below the Reserve Bank’s 2-3 per cent inflation target.
- Wages are still growing at a slower pace than in the past. But wages are outpacing prices and have lifted from lows. And businesses can’t absorb higher costs forever. The next wage price index data is released on August 14. 
- The Reserve Bank has cut rates in quick succession. At the same time there are indications that economic momentum has improved since the election. The US Federal Reserve is poised to cut rates. So it is opportune that the RBA stays on the interest rate sidelines for now. But with inflation below the target band and likely to remain low, the Reserve Bank can cut rates further if it believed it would be successful in generating faster economic growth, higher wages and lower unemployment. 
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CRAIG JAMES is the chief economist at <a href="https://www.comsec.com.au/default.aspx" target="_blank">CommSec</a>. 
 
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cjames-5S2v74qSNK

Inflation dragon still dozing: CommSec

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Australia's Consumer Price Index has risen 0.6 percent over the June quarter, slightly higher than expectations. 
The biggest drivers in the uptick of prices was fuel, up 10 percent.
International holiday travel and accomodation was up 2.7 percent, medical and hospital services was up 2.6 percent and tobacco was up 2.4 percent.
On the flip side, prices for fruit and vegetables were down 2.8 percent), domestic holiday travel and accommodation was down 1.5 per cent and electricity was down -1.7 per cent over the quarter.
"Inflation remains contained," noted CommSec chief economist Craig James.
"But we can never claim that the inflation dragon is dead, rather resting. 
"Higher fuel prices can be passed through in terms of higher taxi and public transport fares as well as freight and courier prices. 
"Weather events like the current drought in eastern Australia can push up prices of supermarket goods as well as café, restaurant and takeaway food prices. 
"The high activity in infrastructure building can put upward pressure on construction sector wages, in turn lifting prices of newly-built dwellings,' James advised.   
ABS chief economist Bruce Hockman said automotive fuel price rise of 10.2 per cent in the June quarter 2019 contributed to half of the 0.6 per cent rise this quarter.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/7/31/CPI%20quarterly%20change.jpg" alt="">
 
"Automotive fuel prices returned to levels recorded in late 2018 after falling 8.7 per cent in the March quarter 2019." The CPI rose 1.6 per cent through the year to the June quarter 2019, after increasing 1.3 per cent through the year to the March quarter. 
"Annual growth in the CPI continues to be subdued due to falls in a number of administered prices. Through the year, utility prices have fallen 0.2 per cent and child care has fallen 7.9 per cent following the introduction of the Child Care Subsidy package in July 2018."
Westpac had been <a href="/expert-insights/investing/cpi-forecast-to-rise-for-june-quarter-westpacs-justin-smirk">forecasting a 0.5% rise</a> in the June quarter CPI, taking the annual pace to a 1.5% rise from 1.3%.
"The June quarter tends to be a seasonally soft quarter with the ABS projecting a seasonal factor of 0.2ppt increase," Westpac's Justin Smirk said.
IFM economist Alex Joiner says the figures were a slight upside surprise, however it is inline with expectations on core measures.
ANU professor Ben Phillips says CPI for child care shows that since 2002 prices after subsidies up 69% or 14% (real terms). About -6% relative to incomes.
Darwin saw the biggest increase in inflation, up 0.8 percent, driven by a 14 percent rise in domestic holiday, travel and accomodation prices.
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jrobinson-rf4aSBido9

CPI rises 0.6 percent in June quarter 

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EXPERT OBSERVER
Westpac is forecasting a 0.5% rise in the June quarter consumer price index (CPI) lifting the annual pace to a 1.5% rise from a 1.3% rise.
The June quarter tends to be a seasonally soft quarter with the ABS projecting a seasonal factor of 0.2ppt increase. The seasonally adjusted CPI is forecast to rise 0.7%.
The trimmed mean is forecast to rise 0.33% in the June quarter or 1.5% over the year and the weighted median is forecast to rise 0.30% in the June quarter/1.1% over the year.
The average of the core inflation measures is forecast to print 0.31% in the June quarter with the annual pace easing back to a 1.3% rise from a 1.4% rise.
In June, we forecast that fresh fruit and vegetable prices drag food prices down 0.4% in the quarter.
<a href="https://www.propertyobserver.com.au/images/2019/7/16/CPI%201.jpg" target="_blank">Click here</a> to enlarge:
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/7/16/CPI%201.jpg" alt="">
Source: Westpac 
Housing costs are down slightly due to falling utilities and there is the usual seasonal fall in pharmaceuticals while car prices fall again.
Auto fuel is forecast to make the single largest contribution rising 11%.
Alcohol and tobacco rose modestly while clothing and footwear had a positive quarter.
Health costs continue to rise solidly (as rising medical and hospital services more than offset falling pharmaceuticals) and there was an unseasonal gain in domestic holiday travel.
Traded prices are forecast to rise 0.8% in the June quarter while non- traded prices are forecast to rise 0.4% in the June quarter.
Outside of fuel, there is very little inflationary pressure in the Australian economy.
<a href="https://www.propertyobserver.com.au/images/2019/7/16/CPI%202.jpg" target="_blank">Click here</a> to enlarge:
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/7/16/CPI%202.jpg" alt="">
 
Core inflation remains well below the bottom of the RBA target band as moderating housing costs hold back modest inflationary pressure elsewhere.
Competitive deflationary pressure in consumer goods is limiting the pass through of the weaker AUD though it is having an impact.
As such, we find it hard to see how core inflation could break higher any time soon.
<a href="https://www.propertyobserver.com.au/images/2019/7/16/2019%20Q2.jpg" target="_blank">Click here</a> to enlarge:
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/7/16/2019%20Q2.jpg" alt="">
Recap March quarter CPI - above expectations
The CPI was flat in the March quarter compared to a market median expectation of 0.2% and Westpac’s 0.1%.
The annual rate eased back to 1.3% from 1.8% in Q4.
Of note, housing costs were flat in the quarter as falling dwelling prices offset modest gains in rents and other housing costs which is key to low non-tradable and core inflation prints.
<a href="https://www.propertyobserver.com.au/images/2019/7/16/dwelling%20inflation.jpg" target="_blank">Click here </a>to enlarge:
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/7/16/dwelling%20inflation.jpg" alt="">
<a href="https://www.propertyobserver.com.au/images/2019/7/16/dwelling%20prices.jpg" target="_blank">Click here</a> to enlarge: 
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/7/16/dwelling%20prices.jpg" alt="">
<a href="https://www.propertyobserver.com.au/images/2019/7/16/weaker%20AUD.jpg" target="_blank">Click here</a> to enlarge: 
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/7/16/weaker%20AUD.jpg" alt="">
Drought is a surprising negative for food prices in Q2
The continuing dry conditions on the east coast have, for now, suppressed wholesale prices for agricultural goods as growers sell stock they can no longer support increasing supply. 
This is particularly so for meat (beef and lamb) but we have to be careful not to take this too far due to significant variation in the quality of stressed stock plus, for now, anecdotally many growers are choosing to bear the costs of feeding stock rather than selling.
<a href="https://www.propertyobserver.com.au/images/2019/7/16/lamb%20price%201.jpg" target="_blank">Click here</a> to enlarge:
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/7/16/lamb%20price%201.jpg" alt="">
<a href="https://www.propertyobserver.com.au/images/2019/7/16/beef%20price.jpg" target="_blank">Click here</a> to enlarge:
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/7/16/beef%20price.jpg" alt="">
Beef and veal prices are expected to rise modestly as are lamb and goat prices.
Pork should have a seasonal fall in price but we are closely watching the rise in global pork prices as a large proportion of the Chinese pork herd is slaughtered to control an outbreak of African swine flu. This should be boosting the price of imported pork and has been boosting the demand for alternative meats including chicken.
<a href="https://www.propertyobserver.com.au/images/2019/7/16/veggie%20price.png" target="_blank">Click here</a> to enlarge:
<img src="https://www.urban.com.au/images/2019/7/16/veggie%20price.png" alt="">
Wholesale prices are pointing to meaningful fall in fresh fruit and vegetable prices. All up we are looking for a –0.4% fall in food prices (–0.07ppt contribution).
Alcohol and tobacco remains a source of inflation
Tobacco in particular remains a key source of inflationary pressure.
Even without excise indexing, tobacco prices are expected to rise 2% in Q2 contributing 0.06ppt to the CPI.
By comparison alcohol is expected to rise 0.4% contributing 0.02ppt to the CPI.
Clothing and footwear has a small seasonal rise
In recent years clothing and footwear prices have tended to rise in the June quarter due to the repricing post the New Year sales and before the start of the end of financial year sales.
We also expect to see some pass-through from the weaker AUD that has given a small boost to imported goods prices.
However, the trend has been for the Q2 rise to be softer than historically hence Westpac is forecasting a very modest 0.5% gain in the quarter contributing 0.02ppt.
Housing set to be flat in the quarter
We are looking for rents to be flat in Q2. Industry data suggests that with vacancy rates rising, particularly in Sydney, the pressure remains on rents.
But this series measures all rents being paid, including public sector rents, and not just the new contracts being signed (which is what is reported in most industry data).
As such, we caution against forecasting ongoing falls in rental prices, at least for now.
Dwelling purchase price changes in Sydney and Melbourne have been quite volatile on a quarterly basis but there has been a moderation in the annual pace consistent with industry data.
Price changes have eased in Brisbane and Adelaide while the correction in Perth was having a second wind through the second half of 2018 but stabilised in 2019 Q1.
For utilities we are also looking for the usual June quarter rebound in gas prices while the wholesale prices suggest some further correction in electricity prices is likely.
Our forecast a 0.1% fall in housing costs will contribute –0.01ppt to the CPI.
Household contents and services to have a seasonal bump
Furniture and carpets, household textiles and appliances are set to have a seasonal bump but we have muted it a bit for appliances as the price competition here has been limiting this rise.
Our estimate is 0.5% (contributing 0.04ppts) does include an allowance for some modest pass through from the impact of the weaker AUD on import goods prices.
Health has a seasonal bump despite falling pharmaceuticals
The June quarter is the first quarter for many households where the PBS (Pharmaceutical Benefits Scheme) kicks in as they have spent over the threshold limit on healthcare and thus can access government assistance.
But the rise in other health costs more than offsets this price fall and Westpac is forecasting 2.1% rise in health costs contributing 0.12ppt.
Automotive fuels will be the main boost to prices
For transport, pump prices of automotive fuels lifted 11% in the June quarter.
However, allowing for a seasonal fall in vehicle prices, and modest gains elsewhere, transport costs are likely to rise 2.9% in the June quarter contributing 0.29ppt.
<a href="https://www.propertyobserver.com.au/images/2019/7/16/auto%20fuel.jpg" target="_blank">Click here</a> to enlarge:
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/7/16/auto%20fuel.jpg" alt="">
Airfare data suggests domestic holiday travel prices are rising rather than the seasonal norm for a fall.
Normally domestic holiday travel costs fall in the June quarter as it is the offseason for the Australian travel/holiday industry. But BITRE airfare data suggests there were some modest gains in the quarter.
In addition, the weaker AUD is pointing to some price gains for international holidays.
When you add in the ongoing falls in the price of audio visual and computer equipment, recreation and culture is forecast to rise 0.7% in the June quarter contributing 0.07ppt.
<a href="https://www.propertyobserver.com.au/images/2019/7/16/domestic%20travel.jpg" target="_blank">Click here</a> to enlarge:
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/7/16/domestic%20travel.jpg" alt="">
Core inflation remains below the bottom of the band.
The trimmed mean is forecast to rise 0.3% with the annual pace easing back to 1.5% from 1.6% over the year.
Our forecast for the average of the RBA core measures of inflation is a modest 0.3% in the June quarter with the annual rate easing back to 1.3% from 1.4% over the year.
This will see the two quarter annualised pace of the average of the core measures ease back to 1.0% from 1.2% over the year.
Traded goods and services are forecast to rise 0.8% in the June quarter/0.7% over the year and non–traded prices are forecast to rise 0.4% in the June quarter /1.9% over the year.
<a href="https://www.propertyobserver.com.au/images/2019/7/16/indicator%20of%20cpi.jpg" target="_blank">Click here</a> to enlarge: 
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/7/16/indicator%20of%20cpi.jpg" alt="">
JUSTIN SMIRK is ‎a senior economist, Westpac Group and can be contacted <a href="https://www.westpac.com.au/about-westpac/westpac-group/" target="_blank">here</a>.
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CPI forecast to rise for June quarter: Westpac's Justin Smirk

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Australia’s headline inflation rate softened to just 0.1 per cent for the March quarter pushing the annual rate down in seasonally adjusted terms to 1.3 percent from 1.8 percent.
Today’s inflation figures for the Q1 showed a bleak picture, with both the headline and core figures missing economist expectations.
With the CPI coming in at zero, the Aussie dollar plunged. The Aussie dollar fell over half a cent against the greenback in quick response.
Interest rate cuts are now surely on the table at the next RBA meeting, economists suggest.
Columnist Pete Wargent described it as an "epic miss."
"The incompetence, ineptitude and policy failure of the RBA is now there for all to see," tweeted Stephen Koukoulas.
"An interest rate cut on 7 May - based on a weak economy - will be hugely interesting during the election campaign," he added.
The core figures matched expectations, keeping the annualized inflation rates below the Reserve Bank of Australia’s (RBA) 2-3 percent target range.
The Commsec economist Craig James noted: "Inflation is clearly not an issue."
"The published rate of inflation didn’t budge in the first three months of the year.
"Strip out volatile items and ‘underlying’ prices advanced around 0.2 per cent.
"In annual terms, annual inflation stands at a 2½-year low.
"Arguably the annual rate of ‘underlying’ inflation is the lowest on record at 1.4 per cent," James said.
James said the door "remains ajar to a rate cut."
"That is, should a rate cut be needed.
"The unemployment rate remains near decade lows – indeed the NSW trend jobless rate is at record lows."
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CPI stays low

soliver-smf6LQXgW9

Australian inflation continues declining: Shane Oliver

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The Consumer Price Index (CPI) rose 0.4 per cent in the September quarter 2018, according to the latest ABS figures. 
This follows a rise of 0.4 per cent in the June quarter 2018.
The CPI rose 1.9 per cent through the year to September quarter 2018, having increased 2.1 per cent through the year to the June quarter 2018.
Bruce Hockman, chief economist for the ABS, said annual growth in the CPI fell back below 2 per cent in the September quarter 2018.
"Modest rises in housing costs, including rents, utilities and property rates, and a fall in child care out-of-pocket expenses, saw a subdued rise in the CPI this quarter.”
AMP Capital chief economist Shane Oliver said the September quarter inflation data confirms that underlying pricing pressures in the Australian economy are still weak.
"Spare capacity remains high, wages growth remains weak and competition and technological innovation in numerous industries (retail, communications and services) remains intense," Oliver said.
Click here <a href="http://www.abs.gov.au/ausstats/abs@.nsf/a59af5c52fda0c7dca25704c001d21fa/902a92e190c24630ca2573220079ccd9/Body/0.89A!OpenElement&amp;FieldElemFormat=gif" target="_blank">to enlarge.</a>
<img src="http://www.abs.gov.au/ausstats/abs@.nsf/a59af5c52fda0c7dca25704c001d21fa/902a92e190c24630ca2573220079ccd9/Body/0.89A!OpenElement&amp;FieldElemFormat=gif" alt="Alternate text: The CPI All Groups rose 0.4 per cent in the September quarter 2018. The most significant positive contributors are Recreation and culture +1.6 per cent; Alcohol and tobacco group +1.3 per cent; Housing group +0.4 per cent; and Transport gr" width="539" height="535" data-gtm-vis-first-on-screen-6766017_33="5627" data-gtm-vis-total-visible-time-6766017_33="100" data-gtm-vis-has-fired-6766017_33="1"> 
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The most significant rises this quarter are international holiday travel and accommodation, which grew 4.3 percent, fruit (+2.4 percent) and property rates and changes (+2.3 percent). 
There were big falls in childcare, which fell nearly 12 percent following the introduction of the Child Care Subsidy on 2 July, which replaced the Child Care Rebate and Child Care Benefit.
Telecommunications equipment and services declined 1.5 percent.
Oliver said pricing power remains very weak with inflation at the bottom of the range.
Click here <a href="https://www.propertyobserver.com.au/images/2018/10/31/inflation.jpg" target="_blank">to enlarge.</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/10/31/inflation.jpg" alt="">
"The September quarter inflation data confirms yet again that pricing power remains very weak and inflation is continuing to run around or just below the RBA’s 2-3% target band.
"There are no signs of any near-term significant price pressures in Australia, particularly with subdued wages growth and competition and technological innovation remaining intense.
Oliver said AMP's view is that the RBA won't raise interest rates until late 2020 at the earliest given the weakness in inflation, wages and the Sydney and Melbourne housing markets.
He said that with the uncertain outlook for consumer spending, the next move being a rate cut cannot be ruled out.
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Subdued Consumer Price Index rise in September quarter 

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EXPERT OBSERVATION
Westpac’s forecast for the September quarter headline CPI is 0.5%qtr which will see the annual pace ease to 2.0%yr from 2.1%yr.
Westpac’s forecast leaves the two quarter annualised pace at 1.6%yr.
The September quarter is a seasonally strong quarter with the ABS projecting a seasonal factor of +0.30ppt. However, this is larger than the average of the June quarter seasonal factor for the previous two years (average 0.27ppt) so there is a risk that this estimate will be revised downward.
Core inflation is forecast to print 0.3%qtr (0.31% at two decimal places) seeing the annual pace ease to 1.8%yr from 1.9%yr. The trimmed mean AND weighted median are both forecast to rise 0.31%.
The two quarter annualised pace of core inflation eases back to 1.5%yr from 2.0%yr putting inflation momentum below the RBA’s target band.
We have lifted our Q3 forecast (it was 0.3%qtr) due to rising petrol prices (impact is set to be even larger in the December quarter) plus the impact of drought on fresh fruit, lamb and cereal product prices (beef prices have been falling as cattle have been sold).
We have also made a small allowance for the introduction of GST on imported goods worth less than $1,000.
The big unknown this quarter is the impact of changes to childcare rebates. Back in 2007 and 2008 increases in rebates saw childcare prices fall between 20% and 30% each year.
This time the impact appears to be somewhat less but we have not found a way to confidently estimate it. Our -7% forecast is our “best guess” with the limited information. 
Traded prices are forecast to rise 1.2% in the quarter to be up 1.8%yr, while non-traded prices are forecast to rise 0.1%qtr/2.0%yr due to moderating housing costs moderate and falling childcare.
Core inflation remains below the bottom of the RBA target band due moderating housing costs.
Overlay a competitive deflationary cycle in consumer goods and it makes it hard to see core inflation breaking much higher.
Market forecasters over estimated the quarterly change in the CPI for the last seven quarters by an average of +0.14ppt. Will they do it again making it two consecutive years of overestimating inflation?
Justin Smirk is a Senior Economist for Westpac
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