New Zealand's recent wave of migration will continue to pressure rates as it feeds through to demand.
New Zealand recorded an annual net migration gain of 133,800 to the year ending in January. The country's population grew 2.8% in 2023, one of the highest per capita migration levels amongst OECD countries.
Data showed recent high immigration levels correlated with elevated CPI, Wilson added. (See chart) However, CPI lagged monetary tightening, which presented challenges when making a comparison with immigration levels, he cautioned. "One of the challenges measuring this is trying to work out what's counterfactual, what would have happened without the migration?"
CHANGING PATTERNS
Wilson noted migration had an immediate effect on demand, though the changing patterns of entry, such as increased numbers of temporary migrants, made calculations more complex. "Some temporary migrants can have a lower impact on demand if they're sending remittances back home, or they're saving or they're prepared to live in a more crowded accommodation or cheaper accommodation," he noted. Outward migration also needs further analysis, he added.
"Are we losing our best and brightest to Australia and the world? And what is the impact on productivity and the economy's growth?"
A NZIER paper on the impact of migration of inflation commissioned by the RBNZ and published this week concluded more research is needed.
Commenting on the report, RBNZ Chief Economist Paul Conway in a statement Wednesday called for more research. "Large migration flows are a key feature of the New Zealand economy, and we need to better understand their effects.”
Conway told MNI last year the demand shock from recent arrivals had occurred with a greater delay than expected. (See MNI INTERVIEW: Migrant Demand Poses Rates Risk-RBNZ's Conway)