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Q3 CPI Preview: Underlying Inflation To Keep RBNZ Hawkish


NZ CPI for Q3 is published on Tuesday and is expected to rise 1.5%q/q (down from 1.7% in Q2), according to Bloomberg, but the range of forecasts is wide from 1.3% to 2.0%. The median would leave headline inflation at 6.6%y/y down from the Q2 32-year high of 7.3%, and past its peak.

  • The expected easing in headline inflation is unlikely to be a reason to expect a more dovish RBNZ, as underlying inflation pressures probably didn’t improve in Q3.
  • The domestically-driven non-tradeable CPI is expected to have outpaced the tradeable component in Q3, as softer energy and food prices weigh on the latter. Non-tradeable CPI is expected to rise 1.8%q/q (Q2 1.4%)and tradeables +1.2% (Q2 1.9%).
  • If economists are correct, this would show that domestic inflation pressures rose during the quarter leaving the annual non-tradeable inflation rate steady at around 6.3%, thus justifying the RBNZ’s continued hawkishness.
New Zealand CPI y/y%

Source: MNI - Market News, Refinitiv

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