Australia and New Zealand: Weekly Prospects

Research evidence excerpt

Australia and New Zealand: Weekly Prospects

J P M O R G A N Economic Research

22 June 2026

Australia and New Zealand:

Weekly Prospects

• We expect Australia’s May CPI data to consolidate a likely undershoot vs RBA Australian and New Zealand Interest

staff forecasts for 2Q, with the annual rate staying at 4.2%oya and monthly Rate Strategy

prices contracting (-0.5%m/m). May was a seasonally softer month for the Ben K Jarman

now-retired monthly CPI indicator, and on early evidence, even more so on the (61-2) 9003-7982

official CPI. This time around there are more positive contributions given oil ben.k.jarman@jpmorgan.com

shock/cost pass-through in a few channels, but on the month this should be Tom Kennedy

offset by a hefty double-digit decline in direct fuel prices. The government’s (61-2) 9003-7981

decision to halve the fuel excise tax, weighed on April with some pass-through tom.kennedy@jpmorgan.com

into May, but there has also been a more fundamental drag from lower global Tom Ryan

(61-2) 9003-7632

prices and domestic refiner discounting as well. thomas.f.ryan@jpmorgan.com

• In the absence of an upside surprise in May, we think 2Q CPI is significantly J.P. Morgan Securities Australia Limited

undershooting RBA forecasts on the combination of faster normalization in

crude prices, and relatively narrow pass-through of second-order costs. The

fuel excise cut is set to half-expire on June 30 and, with more positive US-Iran

developments of late and a decline in global energy prices, it is unlikely to be

extended. As a result, fuel prices are likely to spike from early July,

contributing to elevated headline inflation in 2H26, but the sequential peak

should be lower than initially feared, which will lower annual inflation and help

with the anchoring of expectations.