January 22, 2025 02:31 GMT
NEW ZEALAND: Core Eases But Non-Tradeables Proving Sticky
NEW ZEALAND
The RBNZ’s sector factor model estimate of Q4 core inflation eased 0.2pp to 3.1% y/y, close to the top of the 1-3% target band. Q3 was revised down 0.1pp to 3.3%. Given that headline was impacted by volatile components such as air fares, the move lower in underlying inflation is good news and another 50bp rate cut in February remains the base case. But underlying non-tradeables inflation is proving sticky and will continue to be watched closely.
NZ core CPI y/y% (RBNZ sector factor model)

Source: MNI - Market News/RBNZ/Refinitiv
- Moderation in core non-tradeable inflation remains slow and it was down only 0.1pp to 4.6% y/y, the lowest since Q1 2022 but still elevated. The series average is 3.3%. Its moderation from the peak remains significantly less than the overall core, but restrictive monetary policy and weak demand should help to bring it still lower.
- Core tradeables inflation was only 0.2% y/y in Q4 after 0.4%. The headline number picked up driven by volatile second-hand car prices. The drop in the underlying measure signals that weak discretionary spending is weighing.
NZ core CPI y/y% (RBNZ sector factor model)

Source: MNI - Market News/RBNZ
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