April's inflation data for Australia showed only modest signs that higher input costs were flowing through to the broader inflation basket, ANZ Research said in a note on Wednesday.
Australia's consumer price index (CPI) rose 4.2% in the 12 months to April, down from a 4.6% increase in the year to March, the Australian Bureau of Statistics reported. Trimmed mean inflation came in at 3.4% in the 12 months to April, up from 3.3% in the year to March.
On a three-month annualized basis, trimmed mean inflation is only just above the top of the central bank's target band, at 3.1%. There were signs of second-order impacts materializing, but they were relatively contained to expenditure categories.
The fact that there was little evidence of a rise in purchase price growth flowing through to the April CPI data suggests that it may be more challenging for businesses to pass on costs quickly.
The major supermarkets lifted the price of foods such as milk in late April, which may lead to inflation accelerating in the food group in May.
It continues to expect the Reserve Bank of Australia to keep rates on hold at 4.35%.
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