New Zealand Inflation Q1 2016

New Zealand

New Zealand: Inflation rises in Q1

April 18, 2016

A renewed fall in oil prices at the beginning of the year offset inflationary pressures coming from a weakening New Zealand dollar. In Q1, consumer prices rebounded and rose 0.2% over the previous quarter, which contrasted the 0.5% decline registered in Q4. Q1’s result overshot the 0.1% rise the markets had expected and, according to Statistics New Zealand, the quarterly increase reflected higher prices for food and housing-related goods. That said, gas prices at the pump fell significantly in the first quarter.

Owing to the quarterly increase, headline inflation rose from 0.1% in Q4 2015 to 0.4% in Q1 2016. Despite the increase, inflation remains well below the Reserve Bank of New Zealand’s 1.0%-3.0% inflation target range. Annual average inflation remain unchanged in Q1at Q4’s 0.3%.

According to its March Monetary Policy Statement, the Bank expects inflation to remain subdued this year and average 0.4%. For 2017, the Bank expects inflation to average 1.3%. FocusEconomics Consensus Forecast panelists expect inflation to average 1.6% in 2016, which is down 0.1 percentage points from last month’s forecast. For 2017, the panel foresees that inflation will rise to 1.9%.


Author: Ricard Torné, Lead Economist

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New Zealand Inflation Chart


New Zealand Inflation Q1 2016

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


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