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RBNZ Expecting Strong Q3 CPI Print


Q3 CPI prints on Tuesday and is expected to show a jump in quarterly inflation with both tradeables and non-tradeables expected to post larger rises than in Q2, implying that the increase is not just an oil story. Q3 is expected to be boosted by higher accommodation and insurance prices plus increased government charges including public transport. The RBNZ is likely to look through the data if it’s in line with expectations as it forecast a strong Q3 outcome of 2.1% q/q and 6% y/y in August, higher than the Bloomberg consensus. Also at its October meeting it said it was focused on the medium term.

  • Headline CPI is expected to rise 1.9% q/q and 5.9% y/y after 1.1% and 6% in Q2 with most quarterly estimates between 1.8% and 2.2%. Of the local banks Westpac and Kiwibank are in line with consensus but others see upside risks - BNZ expects +2.1% q/q and ASB & ANZ +2.2%.
  • The RBNZ’s measure of core inflation has been stuck at 5.8% for the last three quarters, its series high, and markets will be looking for some moderation to reassure that the RBNZ is firmly on hold.
  • Non-tradeable CPI is expected to rise a stronger 1.8% q/q up from 1.3% in Q2. ASB and BNZ are in line with consensus but Westpac is below at 1.7% and Kiwibank at 1.6% but ANZ higher at 1.9%.
  • Tradeables CPI in Q3 is projected to rise 2.4% q/q after 0.8%. ANZ and ASB are higher forecasting 2.5% and 2.9% respectively, while Westpac is in line and BNZ & Kiwibank lower at 2.3%.

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