Consumer prices rose 1.8% in the September quarter and are up 5.6% over the year. The result was below our forecast and much lower than the RBNZ expected in August.
Consumers Price Index, September quarter 2023
- Quarterly change: +1.8% (prev: +1.4%)
- Westpac: +1.9%, RBNZ (May MPS): +2.1%
- Median market f/c: +1.9%, range +1.2% to +2.3%
- Annual change: +5.6% (prev: +6.7%)
- Westpac: +5.8%, RBNZ: +6.0%, Market f/c: +5.9%
New Zealand consumer prices rose 1.8% in the September quarter which saw the annual inflation rate dropping back to 5.6%, down from 6.0% in the year to June. Today’s result was below our forecast, and much lower than the RBNZ expected in the August Monetary Policy Statement.
The September quarter CPI report points to a faster easing in aggregate inflation pressures than we or the RBNZ had been expecting. But under the surface we see that core inflation pressures remain strong. The weakness in inflation is heavily centred on imported prices (tradables). Much of the softness in these areas reflects a continued easing in early supply disruptions offshore. Importantly non-tradables inflation remains strong and is up 6.3% over the past year and 1.7% for the quarter.
Against this backdrop the chance of a further rate hike from the RBNZ in November is less likely. We will be looking more closely at this as we delve more deeply into the data today. The extent to which core inflation pressures continue to ease rapidly in the December quarter and beyond will be critical in determining the likelihood and timing of rate increases next year. Certainly, the persistence in domestic price pressures means the RBNZ won’t be contemplating cuts any time soon.
