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Rising Inflation Risks Further Outsized RBNZ Hikes


NZ CPI for Q3 exceeded the upper end of expectations rising 2.2% q/q to be 7.2% y/y after 1.7% q/q and 7.3% in Q2. This data is likely to be concerning for the RBNZ, especially the non-tradeable component, and so it’s unlikely it will pivot at the November 23 meeting.

  • Both non-tradeable and tradeable CPIs rose more than expected at 2.0% q/q and 2.2% q/q, respectively, to 6.6% y/y and 8.1% y/y. Non-tradeable inflation reached its highest annual rate since the series began in 2000, which suggests increasing domestic inflation pressures. Therefore, the RBNZ aren’t about to reach its terminal rate despite being one of the first central banks to tighten.
  • The main drivers of the outsized inflation move were housing- and utilities-related components. The cost of building a new home has soared. Food and transport costs were also contributors. Services inflation also rose to 5.1% y/y from 4.3%, the highest since 1995 and another indicator of building domestically-driven inflation.
New Zealand CPI y/y%

Source: MNI - Market News, Refinitiv, Statistics NZ

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