NEW ZEALAND: Q3 Average Inflation Rates Signalling Return To Target

As NZ does not yet have a monthly aggregate CPI series, the release of certain components accounting for around 45% of the total is watched closely. Q3 average annual rates are generally lower, apart from food and overseas air travel, which signals that inflation is on track to moderate towards the RBNZ’s 2.3% y/y forecast. 

• August food prices rose 0.2% m/m and 0.4% y/y, down from 0.6% y/y. It continues to be held down by fruit & vegetable prices which fell 0.8% m/m and -12.2% y/y. But groceries and restaurant meals saw price rises and are running at 2.4% y/y and 3.6% y/y respectively.
• Transport prices were lower with petrol, diesel and air fares all lower on the month. Petrol is down 8.1% y/y after -0.6%, while domestic air travel is -8.5% y/y and international -7.2% y/y. The Auckland fuel levy was removed in July.
• Increases for existing rentals were steady at 4.3% y/y, but for new rentals they fell for the fourth straight month and are now up only 1.4% y/y down from 7.2% y/y in September 2023.
• Accommodation services rose sharply on the month driven by overseas. The series is volatile though and has averaged -0.5% y/y in Q3 down from +3% in Q2.
• Alcohol and tobacco was unchanged on the month to be up 6.2% y/y down from 6.5% in July.

NZ monthly prices y/y%