The carbon tax starts on 1 July and should add 0.7pp to the CPI. This matches RBA and Government forecasts, although we estimate a larger 0.5pp boost to underlying inflation. The risk is that the boost to the CPI is larger, although with some delay. The RBA also meets this week and should keep rates steady at 3.5% given it recently said that the June rate cut had been a finely-balanced decision.
Click here to read the full report: Economic Research
Barclays Capital