While the economic data released this week were a mixed bag, we think that soaring inflation will trump any slowdown in activity. Indeed, with wholesale electricity prices surging to record highs, it now seems likely that utilities bills will become a major source of price pressures, too. We now expect inflation to surpass 7% in Q3, which may well force the Reserve Bank of Australia to do series of rate hikes larger than the 25bp increase in May before long.
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