The inflation update will be released today by Stats NZ
Economists are expecting new Stats NZ figures to show that annual inflation has passed a peak.
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The inflation update will be released today amid differing opinions over whether the economy could remain “stronger for longer” than predicted or would be pushed down further and faster than expected by heightened fears of a global recession.
The Reserve Bank of New Zealand said in August that annual inflation during the September quarter would likely slip from its peak of 7.3% to 6.4%, while BNZ and ASB were expecting a 6.5% rate and ANZ was predicting it to hit 6.6%, Stuff reported.
Infometrics and Kiwibank both predicted a 6.8% rate, while Westpac was topping out the forecasts with 6.9% prediction.
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Stephen Toplis, BNZ research head, said inflation not falling from the 7.3% annual rate that Stats NZ recorded in the June quarter would result in a huge market reaction.
No forecasters, however, seem to expect a drop large enough to dissuade the central bank from further hiking rates.
Toplis said it wasn’t worth speculating how much of a fall could call into question BNZ’s current expectation of another 50-basis-point increase in the OCR next month, as a decline in inflation of that size was too unlikely.
He said it was inevitable that inflation would fall in the three months to the end of September given that the 2.2% surge in prices posted in the September 2021 quarter would drop out of the annual index this time.
That earlier increase had been the largest quarterly rise in the consumer price index since 1987, excluding the impact of a GST rise in 2011, and has not since been surpassed, Stuff reported.
Gareth Kiernan, Infometrics chief forecaster, said that based on its forecast, inflation would not have fallen at all in the September quarter this year if falling fuel prices were taken out of the equation.
“There is still a breadth of inflationary pressures across the economy,” Kiernan said.
When setting interest rates, RBNZ focuses more on “core” inflation in “non-tradable” goods and services whose prices are determined locally.
Both ANZ and the Reserve Bank predict non-tradable inflation to remain unchanged from the June quarter at 6.3%.
Kiernan said a drop in inflation to under 6% would probably push RBNZ to take notice.
But with a 5% increase already locked in from previously reported rises in the prior three quarters, that would require quarterly inflation to plunge unexpectedly to less than 1% in the September quarter, Stuff reported.
