Q1 CPI To Remain Elevated, Local Banks Expect Print Above Consensus

In April, the RBNZ hiked another 50bp bringing rates to 5.25%. It opted for this outsized move as inflation remains “too high and persistent”. On Wednesday April 19, Q1 NZ CPI prints and while it is expected to moderate it is likely to continue to be elevated driven by higher food and construction prices related to the earlier Cyclone. Bloomberg consensus is at 1.5% q/q and 6.9% y/y after 1.4% and 7.2% in Q4. The RBNZ is likely to look through the short-term weather effects on inflation but will be more concerned if rebuilding adds to price pressures.

• There is a variety of quarterly estimates from 1.3% q/q at the low end to 1.8% at the high end but most are between 1.4% and 1.7%. This leaves the annual rates forecast between 6.7% and 7.2%.
• Kiwibank and BNZ both expect 1.7% q/q and 7.1% increases, the ANZ 1.7% and 7.2% and ASB 1.8% and 7.2%, so all of the major local banks expect Q1 CPI to print above consensus.