Strong goods inflation probably won’t last

The resilience in Q3 inflation was driven by the strongest increase in goods prices in a decade. But with import price growth now slowing, we think that strength won’t last. Meanwhile, we’ve lifted our year-end forecast for the Australian dollar as we no longer expect a major sell-off in global stock markets this year and we’ve pushed back the timing for the next RBA cut to February. But we still expect the currency to weaken further over the coming year as the RBA eases policy by more than most anticipate.