TD Securities analysts highlight a record monthly rise in the Melbourne Institute Inflation Gauge, pushing headline and trimmed mean inflation to their highest non-COVID levels since 2008. At the same time, Australian household spending growth is modest and momentum is slowing. They warn that higher Oil prices after the US‑Iran war breakout skew spending risks to the downside in coming months.

Inflation spikes as spending momentum slows

"In a sign of what's to come, the headline inflation gauge rose 1.3% m/m, the largest monthly rise recorded in the series' history, to 4.3% y/y."

"The annual print is the highest since Sep 2008 if we exclude the COVID period."

"Meanwhile, the trimmed mean measure rose 0.4% m/m, with the annual core measure rising 4.4%."

"Removing the COVID period, this is the highest annual trimmed mean print since July 2008."

"Household spending rose 0.3% m/m in Feb (+0.3% m/m in Jan), to +4.6% y/y. "

"The momentum indicators show growth in spending slowing in recent months and the risks are skewed to the downside over coming months following the sharp rise in oil prices following the breakout in the US-Iran war."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)