Institution: Inflation pressures in Australia are still building up.

Economists at Westpac Bank in the Western Pacific warned that despite the lower-than-expected consumer price inflation in April, basic inflationary pressures in Australia are still building. Although the year-on-year inflation rate of 4.2% was lower than their expected 4.8%, the bank's economists saw clearer evidence that businesses are beginning to pass on upstream costs. They noted that residential construction is the most obvious example of this phenomenon, but warned that categories such as takeaway food and restaurant dining continue to experience inflation higher than target, consistent with the accumulation of so-called cost pass-through. Ultimately, they believe that overall lower-than-expected inflation is a welcome surprise, but it will not change anyone's view of the macroeconomic situation.