June inflation will be soft: economists
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Australia's inflation should remain soft in the June quarter, but that may not be enough to prompt a rate cut in August, economists say.
The Consumer Price Index (CPI) is expected to rise by 0.6 per cent in the June quarter for an annual rate of 1.3 per cent, according to an AAP survey of 16 economists.
For underlying inflation, the median forecast was 0.6 per cent for the quarter and 1.9 per cent over the year.
The CPI will be released on Wednesday by the Australian Bureau of Statistics (ABS).
NAB head of research Peter Jolly said any rise in the data would be small, keeping inflation benign.
"If the number remains low, we think it will be to do with discounting going on throughout the retail sector, and also the effect of the currency being higher," he said.
However, it could rise later in the year.
"If you look at broader measures of inflation pressures, like the rate of unemployment, capacity generally tells you there are things that could cause it to rise later," Mr Jolly said.
Macquarie economist Gabby Hajj said there were several indicators of a soft reading for the June quarter.
"New Zealand CPI came out last week, and it was 0.3 per cent - a very soft number," he said.
"There's a high correlation between the two, so we expect that the Australian number will be quite underwhelming.
"We expect it will be mainly affected by the high Aussie dollar, and food prices coming off from last year."
The RBA would probably not cut the cash rate until the last months of 2012, unless inflation and other data remained consistently weak, Mr Hajj said.
At its July meeting, the RBA elected to keep the cash rate on-hold, after cutting in May and June.