NZ Consumer Price Index preview for Q3 2015

New Zealand's run of very subdued inflation is likely to continue with next Friday's release of the September quarter CPI figures. An increase of just 0.1% for the quarter is expected, reflecting changes in various government charges. This would take annual inflation down, which is likely to mark the low point of this cycle, says Westpac.

The remainder of the CPI is expected to continue the long-running themes of strong housing-related inflation (rents and new dwelling prices) against subdued import prices. The tradables prices are expected to fall at a slower pace in the September quarter as the effects of a lower New Zealand dollar flow through. However, the greater impact from the exchange rate is more likely to be felt next year.

"Our forecast of a 0.1% quarterly increase is less than the Reserve Bank's forecast of 0.3% in the September Monetary Policy Statement. However, our annual inflation forecast of 0.2% is in line with the RBNZ, due to some recent upward revisions to the March and June quarters. We think that the result would have to be significantly weaker than this to prompt another OCR cut at the 29 October review given that dairy prices - the RBNZ's biggest concern in September - have improved dramatically since then", estimates Westpac.