New Zealand: Inflation moderates in Q1
Inflation declined to 4.0% in Q1 2024 from 4.7% in Q4 2023. Although the reading represented the lowest inflation since Q2 2021, it remained entrenched above the Central Bank’s 1.0%-3.0% target band. The largest contributor to the year-on-year increase in prices was housing and household utilities due to rising prices for rent, construction of new houses and property rates.
Meanwhile, consumer prices rose 0.6% from the previous quarter in Q1 2024, coming in above Q4 2023’s 0.5% increase.
Commenting on the implications for the monetary policy stance of the Reserve Bank of New Zealand (RBNZ), Lee Sue Ann, economist at UOB, stated:
“Our current view is that the RBNZ may have to resort to rate cuts much sooner than its own guidance to begin lowering rates only in the first half of 2025. Weak growth and rising unemployment are expected to weigh on inflation later this year. However, the latest data shows inflation is proving sticky.”