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New Zealand inflation rises in June quarter, nudging rate expectations
June CPI jumped 1.5% for the quarter, lifting annual inflation to 4.1%, driven largely by fuel and electricity costs.
New Zealand consumer prices rose 1.5% in the June quarter, pushing annual inflation to 4.1% from 3.1% in the year to March, according to Action Forex. The result was in line with the market forecast but slightly above the Reserve Bank of New Zealand’s July assumption of 3.9% annual inflation, with Action Forex pointing to volatile components such as holiday accommodation for part of the upside.
Action Forex said the main driver was higher fuel and energy costs tied to the Middle East conflict, including petrol up 20% over the quarter and diesel up 47%, with those costs accounting for about 4% of the CPI. Core inflation was described as softening, but still above the central bank’s 2% target midpoint amid weaker economic growth and a softer labor market. Action Forex added that it expects further OCR hikes at the Reserve Bank’s September and December meetings, even as it argued the June surprise is unlikely to be a major shock for policymakers.