New Zealand Inflation Q3 2016

New Zealand

New Zealand: Inflation moderates in Q3

In Q3, consumer prices edged down from the quarter-on-quarter seasonally-adjusted 0.4% increase observed in Q2 to 0.2%. The third quarter print overshot market expectations of a flat reading. According to Statistics New Zealand, the moderation reflected lower prices for transport, which more than offset price increases for household items and vegetables.

In Q3, inflation came in at 0.2% (Q2: 0.4% year-on-year). Inflation remains well below the Reserve Bank of New Zealand’s 1.0%-3.0% inflation target range. September’s result suggests that the Reserve Bank of New Zealand may cut the Official Cash Rate at the next policy meeting on 10 November.

According to its August Monetary Policy Statement, the Bank expects inflation to remain subdued and to average 1.1% in the fiscal year 2016, which ends in March 2017. For FY 2017, the Bank expects inflation to average 1.7%. FocusEconomics Consensus Forecast panelists expect inflation to average 0.6% in 2016, which is down 0.1 percentage points from last month’s forecast. For 2017, the panel foresees inflation rising to 1.6%, which is also down 0.1 percentage points from last month’s forecast.


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New Zealand Inflation Chart


New Zealand Inflation Q3 2016

Note: Quarter-on-quarter and annual variation of consumer price index in %.
Source: Statistics New Zealand and FocusEconomics calculations.


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