New Zealand CPI misses expectations, q/q clocks in at just 0.4%

The New Zealand CPI came in below expectations, with the y/y CPI printing at 1.5% versus the expected 1.6% (last 1.1%), while the quarterly inflation reading came in at just 0.4% against the forecast 0.5%. The inflation readings missed broad-market forecasts, but came in very close to the Reserve Bank of New Zealand's own in-house expectations, helping to put a floor under a bearish fall.

Key highlights

"The largest contributor to inflation was higher prices for housing and household utilities, up 0.9 percent this quarter, and 3.1 percent in the year to June 2018.

“New Zealanders are paying more to keep their homes running,” prices senior manager Paul Pascoe said. “Rates, property maintenance services, and home insurance are all higher than they were this time last year.” Higher premiums, fire service, and earthquake levies across the year all contributed to an 18 percent increase in dwelling insurance in the June 2018 year.

Petrol prices rose 3.2 percent in the June 2018 quarter, but this was countered by lower prices for used cars and home entertainment. Used car prices fell 3.3 percent, while subscriber TV and audio-visual equipment fell 7.2 percent and 15 percent, respectively.

“It was cheaper to buy a used car this quarter as dealerships looked to move some stock, but that was offset by higher running costs,” Mr Pascoe said. “With implementation of the regional fuel tax on 1 July, Auckland consumers will experience higher prices next quarter.”

The national average price for a litre of 91 octane reached $2.06 in June 2018, with price movements varying across the regions. Wellington and the South Island had significantly higher inflation than Auckland and the rest of the North Island."