New Zealand Q4 CPI data is due early in Asia Thursday
I posted previews here:
- We expect annual headline CPI inflation to lift slightly, with the major positive influence being a 6% rise in petrol prices seen in the quarter. Beyond that, inflation is likely to remain fairly subdued, with housing costs the only area of clear upward pressure.
- We expect a further modest lift in the measures of underlying inflation.
- The new lower weight for fuel (8.7% to 6.4%) lowered our Q4 CPI forecast from +0.4% to +0.3%/q. Food we already know fell -1.6%/q (and has a higher weight at 19.3%).
- Housing is always robust, and fuel boosts Private transport by +3.5%/q. Expect a seasonal jump in airfares (Public transport +7.4%/q) and otherwise, health and education are neutral for the Dec quarter.
- We find ourselves at the dovish end of the market spectrum, but this is no way detracts from our view that the process-paralyzed RBNZ is increasingly behind the curve.
- We estimate that consumer prices rose by 0.4% in the December quarter, led by higher fuel prices and other transport costs. This would keep the annual inflation rate at 1.9%, very near the 2% midpoint of the Reserve Bank’s target range.
- Excluding the volatile food and fuel categories, we expect annual inflation to remain at a more modest 1.6%.
- Our forecast is slightly higher than the Reserve Bank’s pick of 0.3% for the quarter, although the difference is in the more persistent non-tradable categories where an upside surprise would be more significant.
- The December quarter release will incorporate Stat NZ’s Three – yearly reweighting of the basket of goods and services that make up the CPI. However, the new weights have had very little impact on our inflation forecast.
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