Monday, February 6, 2023
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New Zealand inflation remains high but not as bad as central bank expects

By Lucy Craymer

WELLINGTON (Reuters) – New Zealand’s consumer inflation held at a near three-decade high last quarter but was below the central bank’s forecast, prompting some Analysts are betting on the cash rate and Statistics New Zealand said the rise in the coming months may be less aggressive than previously thought.

Annual inflation was 7.2% in the fourth quarter, unchanged from the third quarter and slightly below the highest level in a decade, it said in a statement on Wednesday.

Inflation came in slightly above economists’ expectations in a Reuters poll at 7.1% annual growth, but below the Reserve Bank of New Zealand’s 7.5% inflation forecast

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On a quarter-on-quarter basis, the CPI rose 1.4% after rising 2.2% in the third quarter.

“It is clear that headline inflationary pressures are not as severe as the RBNZ had feared,” analysts at ANZ said in a note.

“The RBNZ can now respond in its usual fashion to weak activity data, with some restraint on its hawkish stance.”

ANZ and Kiwibank now The RBNZ is expected to raise the cash rate by 50 basis points instead of 50 basis points in February.

At the central bank’s last meeting in November, the central bank raised interest rates by a record amount, forecast further sharp hikes and warned the economy may have to spend a full year in recession, to control high inflation.

The New Zealand dollar has fallen back to 0.6480 from around 0.6480 earlier, while the two-year The interest rate was down 4.865% from Tuesday’s closing price of 4.865%.

Inflation war

Statistics NZ data shows price rises broad-based, house building and household utilities rising, food costs rising and flying costs all on the rise Trend catapults.

Kiwibank economists say New Zealand is now in the midst of peak inflation, with both offshore and onshore inflation improving.

“The downward trend in inflation is encouraging but remains unacceptably high. We expect inflation to end the year slightly above the upper end of the RBNZ’s 1-3% target range,” Kiwibank added road.

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