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Core Inflation Starts To Moderate


The RBNZ’s measure of core inflation from its sectoral factor model moderated to 5.2% in Q3 from 5.7% where it had been since Q4 2022. It is still elevated but the lowest reading since Q2 last year and is likely to be a relief to the RBNZ that underlying price pressures are finally easing. But the move was predominantly driven by core tradeables moderating to 3.8% from 4.6% whereas the domestically-driven core non-tradeables were only 0.1pp lower at 5.1%. The Q3 inflation data released today point to the RBNZ staying on hold in November and a number of analysts have taken a hike then out of their forecasts.

NZ core CPI y/y% vs inflation expectations %

Source: MNI - Market News/Refinitiv/RBNZ

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