New Zealand’s headline inflation likely to have risen in Q4

New Zealand’s headline inflation is set to be released this week. According to a Westpac research report, the consumer price inflation is likely to have risen 0.4 percent in the fourth quarter of last year, driven by increased fuel prices and other transport costs. This might keep the annual inflation rate at 1.9 percent, close to the 2 percent mid-point of the Reserve Bank of New Zealand’s target range. Stripping the volatile food and fuel categories, annual inflation is expected to have remained at a more modest pace of 1.6 percent.

The projection by Westpac is a bit higher than the central bank’s rise of 0.3 percent for the quarter, although the difference is in the more persistent non-tradable categories where an upside surprise would be more significant.

The fourth quarter release will also include Stat NZ’s thee-yearly reweighting of the basket of goods and services that make up the CPI. But the new weights have had very little effect on the inflation projection, stated Westpac.

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