New Zealand’s overall consumer prices are likely to rise a tad below the central bank’s projection in Q1 2016, according to ANZ.
“We expect a 0.1% increase in overall consumer prices, slightly below the RBNZ’s March MPS pick of 0.2%, with annual CPI inflation rising to 0.4%, the seventh consecutive quarter below 1%”, added ANZ.
Tradable prices are likely to fall 0.8% q/q and 1% y/y, whereas non-tradable prices are expected to rise 0.8% q/q and 1.45 y/y. Meanwhile, fuel price declines are likely to be countered by high price in education and tobacco, noted ANZ. Meanwhile, the core inflation measures are likely to come in an annual range of 0.5%-1.5%, added ANZ. A lower inflation and its effect on wage and price setting behaviour imply lower OCR, according to ANZ.
“We concur that the OCR is headed lower (the recent push higher in the NZD being one of many reasons) but are still wary of the trade-offs a lower OCR will bring”, noted ANZ.
