Inflation in New Zealand surpassed estimates in 2019 – UOB

Lee Sue Ann, Economist an UOB Group, assessed the inflation figures in New Zealand during last year.

Key Quotes

“Consumer prices in New Zealand were up 0.5% q/q in the final quarter of 2019. This is slightly higher than expectations for an increase of 0.4% q/q but lower than the 0.7% q/q print in the three months prior. On a yearly basis, inflation surged 1.9% y/y, also above expectations for 1.8% y/y, and much higher from the 1.5% y/y reading in the previous three months.”

“Seasonal increases in transport costs, and rising household costs such as rents, rates and insurance were the main drivers. Rents rose at the fastest pace in more than a decade in 2019, amid strong demand and new rules for accommodation.”

“Overall, the latest inflation numbers would add some cheer to the Reserve Bank of New Zealand (RBNZ). At 1.9%, inflation is very near the midpoint of the 1%-3% target band. The RBNZ had forecast a quarterly increase of 0.2% in its November monetary policy statement, which would have taken the annual rate to 1.6%. We expect the upside surprise will allow the RBNZ to sit tight when it releases its next monetary policy statement on 12 February.”