New Zealand consumer price inflation likely to have slowed in Q2 2017, says ANZ

New Zealand’s consumer price inflation is expected to have slowed in second quarter. According to an ANZ research report, the headline CPI for June is likely to have come in at 0.2 percent sequentially and at 1.9 percent year-on-year, which is a slowdown from the first quarter’s figure of 2.2 percent year-on-year.

Some of the typically volatile components are likely to provide countering movements in the quarter. Food prices are expected to have positively contributed to the headline figure despite already recording the biggest quarterly rise in six and a half years in the first quarter. Subdued autumn weather has resulted in a spike in fruit and vegetable prices that is looking unlikely to unwind until new season product hits the shelves in spring. A decline in petrol price would greatly counter this. Falling petrol looks set to heavily weigh on the third quarter figures dragging annual inflation down to 1.8 percent as the inflation boost from oil prices globally does a sharp U-turn, stated ANZ.

Meanwhile, the housing group is expected to have added 0.8 percentage points to the headline figure. The purchase of housing component is likely to rise by 1.5 percent quarter-on-quarter, which is about the average of the preceding 12 months.

Core inflation measures are expected to have remained widely stable. In the first quarter, some measures of core inflation were actually back above the target-midpoint. The weighted median and 10 percent trimmed mean were both at 2.2 percent. Headline inflation excluding food, petrol and energy was stable at 1.6 percent, and the RBNZ’s Sectoral Factor Model was also stable at 1.5 percent.

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