Key Takeaways
- 💹 New Zealand CPI inflation eased more than expected in Q2
- 📉 CPI rise of 3.3% year-on-year in Q2 was softer than expectations
- ⏬ Quarter-on-quarter CPI rose 0.4%, slowing from the previous quarter
- 💳 Soft CPI readings driven by slower spending on discretionary and recreational items
- 🎯 CPI still above RBNZ’s 1% to 3% target, expected to fall within target by the second half of 2024
- 🏦 RBNZ likely to begin trimming rates later this year
- 📆 Signs of easing inflation could lead to rate cuts as soon as November
- 📈 New Zealand dollar firmed slightly after reading
- 📉 Quarterly inflation fell below expectations in both non-tradeable and tradeable sectors
- 📊 Annual non-tradeable inflation rate was higher than tradeable inflation rate
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- 📈 U.K. economic output data for May was released
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- 💱 The New Zealand dollar rose by 0.4% following the release of the data
- 🛠️ The non-tradeable component of annual inflation remains high due to various factors like rent and construction costs.
- 💰 New Zealand inflation slowed to a three-year low in Q2
- 🏦 Central bank waiting for higher rates to boost economy
- 📈 RBNZ held cash rate at 5.5% but may consider cuts
- 🌐 NZ dollar rose after soft inflation report
- 🏗️ Non-tradeable component of inflation remains high at 5.4%
- 📉 ANZ economists predict rate cuts in November
- 📈 Spare capacity impacting economy
Article:
New Zealand’s Consumer Price Index (CPI) inflation experienced a more significant easing than anticipated in the second quarter of the year. The CPI rose by 3.3% year-on-year, which was softer than expected, with a quarter-on-quarter increase of 0.4%, indicating a slowdown from the previous quarter.
The soft CPI readings were primarily driven by reduced spending on discretionary and recreational items, leading to a decrease in overall inflation. Although the CPI is still above the Reserve Bank of New Zealand’s target range of 1% to 3%, it is expected to fall within the target range by the second half of 2024.
The central bank is likely to respond to the easing inflation by beginning to trim rates later this year, with signs pointing to possible rate cuts as early as November. Following the release of the data, the New Zealand dollar saw a slight firming.
The non-tradeable component of annual inflation remains high at 5.4%, influenced by factors such as rent and construction costs. The Reserve Bank of New Zealand is waiting for higher rates to address inflation and target a 1% to 3% band.
Economists predict potential rate cuts in November as spare capacity continues to impact the economy. The New Zealand dollar rose by 0.4% after the soft inflation report, reflecting market reactions to the latest economic developments.