NEW ZEALAND: Food Inflation Steady, Rents Easing, Petrol Still Negative

NZ released a number of monthly CPI series for October which account for around 40% of the total CPI index. Most major components posted a monthly rise but food prices posted their first drop since May, leaving the annual rate at 1.2%. With rental growth down on a year ago, food steady and petrol negative, the RBNZ is likely to be reassured that inflation should stay in the band in Q4. It will have updated forecasts at its November 27 meeting.

• Food prices fell 0.9% m/m in October driven by a 7.2% decline in vegetables while fruit rose 0.6%. Excluding fresh fruit & veg they fell 0.5% m/m to be up 2.7% y/y after 2.8% in September, with restaurants and groceries driving the positive annual result.
• The moderation in rental growth remains concentrated in new contracts, which fell to +0.7% y/y from 1.2%, but there is some relief for existing tenants too with rents up 4.2% y/y in October down from the 4.6% peak in May. They both rose slightly on the month in October.
• Alcohol & tobacco prices increased 0.6% m/m to be up 5.4% y/y moderating from 6.1% in September driven by tobacco.
• Petrol prices were flat last month and down 13.9% y/y after -14.9% y/y.
• Domestic air travel rose 2.6% m/m to be up 2.4% y/y following -9.6% y/y. while international stayed soft falling 0.4% m/m and -2.8% y/y but up from -9.7% y/y.
• Accommodation services posted their third large straight monthly rise in prices, which is likely seasonal, but the annual rate was steady at 5.2% y/y.

NZ monthly inflation y/y%