The annual inflation rate fell to 6% from 6.7% in the first quarter, Statistics New Zealand said. — Bloomberg
WELLINGTON: New Zealand inflation slowed less than economists expected in the second quarter even as petrol prices fell and the central bank’s aggressive interest rate hikes curbs household spending.
The annual inflation rate fell to 6% from 6.7% in the first quarter, Statistics New Zealand said yesterday.
Economists expected 5.9% while the Reserve Bank of New Zealand (RBNZ) had forecast 6.1%. Consumer prices advanced 1.1% from three months earlier, more than the 0.9% median estimate.
The RBNZ said it’s done raising rates after 525 basis points of tightening since October 2021, the most aggressive since the official cash rate was introduced in 1999.
While the economy has stalled, domestic price pressures remain intense, suggesting it will be some time before inflation returns to the bank’s 1% to 3% target range.
“Domestic inflation remains high, sticky and is lagging the pull back we’ve seen in recent pricing surveys,” said Kim Mundy, senior economist at ASB Bank in Auckland.
“Sticky non-tradable inflation will keep the RBNZ on alert and of the view that monetary policy will need to remain restrictive for the foreseeable future, but we expect the RBNZ to remain on hold.”
The New Zealand dollar rose after the inflation report. Investors increased bets on another RBNZ rate increase this year, though a 25-point move is not fully priced, swaps data showed.
Non-tradables inflation, a closely watched indicator of domestic price pressures, eased to 6.6% from 6.8%. The RBNZ projected 6.3%.
“Prices are still increasing at rates not seen since the 1990s, but are rising at a lower rate than the last few quarters,” the statistics agency said.
Eight of the 11 main groups in the consumers price index basket increased in the quarter. The main drivers were food, residential construction costs and rents, it said. — Bloomberg
