NZ CPI: Running out of gas - ANZ

ANZ analysts note that the New Zealand’s CPI increased 0.1% q/q, below ANZ and market expectations, with annual inflation declining to 1.5% y/y, from 1.9%.

Key Quotes

“Falling petrol and durables prices drove down tradable inflation (-1.3% q/q, -0.4% y/y), while non-tradable inflation rose a solid 1.1% q/q, as expected. Annual non-tradable inflation ticked up from 2.7% to 2.8% – the highest level in five years.”

“Today’s print for CPI inflation was slightly below the 0.2% q/q rise incorporated in the RBNZ’s February MPS. But the details of the print were broadly in line with their expectations, with volatility in tradable prices driving the RBNZ miss.”

“Looking forward, a lower NZD should start to feed more fully into tradable prices, and oil has already rallied 50% from the December low. This will result in a higher tradable inflation forecast in the May MPS, limiting any perceived risk of lower inflation expectations affecting pricing.”