Q4 CPI Expected To Come In Lower Than RBNZ Forecast

NZ Q4 CPI prints on Wednesday 24 January and is forecast to show that inflation moderated to lower than the RBNZ forecast in November but due to the tradeables component. Bloomberg consensus expects headline CPI to rise 0.5% q/q and 4.7% y/y, lower than the RBNZ forecast at 0.8% q/q and 5.0% y/y and down from Q3’s 1.8% q/q and 5.6% y/y. The non-tradeables component will remain a point of interest given that it is domestically driven. It is forecast to rise 0.8% q/q after 1.7% in Q3.

• The RBNZ’s measure of core inflation will be released around 4 hours after the Statistics NZ CPI. It eased 0.5pp in Q3 to 5.2% but has been stickier than the headline series.
• Consensus is in a relatively narrow range for headline CPI of 0.3-0.8% q/q with most estimates at 0.4-0.5% q/q and 4.5-5% y/y and at the median of 4.7% y/y. The major local banks are all at consensus except ANZ who is slightly higher at 0.6% q/q but still expects annual inflation at 4.7%.
• There are only a limited number of forecasts for the non-tradeables component but they are between 0.6% q/q and 1.0%. ASB, BNZ and Westpac are all at the median of 0.8% with ANZ slightly higher at 0.9% but Kiwibank lower at 0.6%.
• NZ CPI is released a week before Australia’s and is likely to be watched closely by the other side of the Tasman as the two have been highly correlated historically.