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New Zealand inflation firm as CPI prints 0.3% for September quarter - ANZ

FXStreet (Delhi) – Mark Smith, Senior Economist at ANZ, notes that the NZ CPI index rose 0.3% q/q in the September quarter, a touch firmer than the market consensus (+0.2%q/q), but in line with ANZ’s and the RBNZ’s pick.

Key Quotes

“Annual CPI inflation held at 0.4%, the fourth consecutive outturn below 1% and the 16th successive outturn below 2%.”

“Offsetting one-offs dominated the result. Stripping these out, a contained inflation environment was depicted, and one that is not as soft as implied by the headline measures.”

“Non-tradable prices were flat over the quarter (+1.4% y/y), close to the RBNZ’s +0.1% expectation.”

“Increases in tradable prices (+0.7% q/q, -1.2% y/y) outpaced nontradable prices for a second consecutive quarter, and while the Q3 result suggests a waning deflationary impact from the previously high NZD, recent rises in the NZD (if sustained) are likely to help hold down price lifts going forward.”

“Despite non-tradable inflation modestly undershooting expectations, we still believe conditions are in place for the RBNZ to pause and assess the impact of its 75bps in OCR cuts at its upcoming OCR Review. However, the likelihood is that the OCR will still be heading lower next year.”

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