Moreover, “We expect significant downward pressure on prices or outright deflation from the clothing and footwear group, household contents and services, and telecommunications. In contrast, prices in the food group and housing are expected to be up relatively sharply.” Toplis adds.
The RBNZ has 0.5% for the quarter so a reading akin to our own will, again, have little impact on the Bank’s view of the world. One of the factors preventing the RBNZ from easing has been the recent resurgence in dairy prices. “Generally, we expect dairy prices to rise further, over time, driven by ongoing issues around the US drought. However, any move in world prices need to be weighed up against currency fluctuations to assess domestic cash flows.” he warns.
Investors will be looking at Friday’s credit card billings for signs of momentum in retail spending through September. While retailers have been reporting significant difficulty in making ends meet this has been because of margin pressure, ongoing increases in shop floor space and the rise of Internet transaction rather than due to a drop off in the spending of householders.