The consumer price index in April was lower than expected with headline inflation falling thanks to the cut in fuel excise, and the all-important underlying figure rising only slightly. The six-month annualised measure of inflation is sitting around 3.25 per cent – still above the RBA’s preferred target band of two to three per cent, but not as high as the central bank had forecast.

With the impact of fuel prices still to feed through the economy, inflation is expected to rise. But the starting, point, or the amount of price pressure in the economy before the Middle East war sent oil prices skyrocketing, appears to be lower than some expected. And that’s good news.

It gives the central bank time to consider the impact of higher fuel prices, this month’s budget and the slowdown in the economy before making a call on rates.

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Greed-o-meter

Source: AMP. ABS

Fear & Greed Q+A today

On the upcoming introduction of Payday Super on July 1, requiring all Australian businesses to pay superannuation at the same time as wages - and why this could see companies face a 'double hit' in July:

 

"This is the crucial message that I think we’ve been trying to get out there. Businesses that are paying their super contributions on a quarterly basis have only got until the 28th day of July to get the contributions in for the last quarter of this financial year.

 

But from the 1st of July, if you’ve got a pay run that happens from that day onwards, you have to make sure you’re complying with the payday super rules as well.

 

So you’ve actually got two lots of outgoings at the same time as far as superannuation goes. And because of that, businesses who haven’t actually sat down with their accountant and explored what their cashflow is likely to look like in the new financial year could find that they’re doubling up on outgoings at the same time with respect to their super contributions."

News in brief

The S&P/ASX 200 fell on opening yesterday and then jumped after the CPI data and kept rising all day, to finish up 0.7 per cent to 8718 points. Interest rate sensitive sectors did well, including consumer discretionary, technology and real estate.

The clamour to convince the federal government to change its proposed capital gains tax proposals is getting louder, with the boss of Commonwealth Bank and tech and mining leaders calling for a rethink.

Endeavour Group’s new chief executive Jayne Hrdlicka has made her first major strategic move, selling most of its vineyard and winery assets and targeting $300 million in cost savings.

Westpac has been hit with a $26 million fine for failing to respond to hundreds of customers who wanted to enter into hardship arrangements when they were struggling with their loan payments.

NASA has released details of robotic landers, hopping drones and vehicles it aims to send to the moon as part of US plans to build a lunar base. The US wants to land Americans back on the Moon before President Donald Trump leaves office in 2029.

Fear-o-meter

Bank of Queensland chief economist, Peter Munckton

The April CPI data came in lower than expected and the good news is that will likely mean the peak in inflation will be lower than feared.

The key question though is how long inflation will remain above the RBA’s target band. This matters as inflation has been too high for much of the past five years

The better-than-expected April CPI data means the RBA will most likely keep the cash rate at 4.35% at its June meeting and also at the August meeting. The risk of a higher cash rate will remain until inflation moves sustainably under 3 per cent.

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