NZ CPI Q1 +0.8 PCT vs pvs QTR 0.5% and +0.3 exp

NZD/USD has jumped 30 pips on New Zealand's Consumer Price Index that has arrived as follows:

NZ CPI – Full report

• Q1 consumer price index non-tradables +3.4 pct vs yr ago.
• Q1 consumer price index +2.5 pct vs year ago (Reuters poll +2.1 pct).
• Q1 consumer price index non-tradables +1.4 pct vs pvs qtr.
• New Zealand Q1 consumer price index +0.8 pct vs pvs qtr +0.4 exp.

"Inflation was pretty much bang on the RBNZ’s target midpoint before COVID-19 transformed from a risk to China’s growth outlook to the largest global economic contraction since the Great Depression. In that context, what inflation did in Q1 is hardly relevant for monetary policy settings today," analysts at ANZ Bank explained. "The RBNZ has already thrown the kitchen sink at it. But even with fiscal support in train, we think it’ll need to add the bathroom vanity as well – We see RBNZ QE roughly doubling to around NZD60bn."

About NZ CPI

Consumer Price Index released by the Statistics New Zealand is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services. The purchase power of NZD is dragged down by inflation. The CPI is a key indicator to measure inflation and changes in purchasing trends. A high reading is seen as positive (or bullish) for the NZD, while a low reading is seen as negative.

Analysts at Westpac explained that, "today’s result means that annual inflation won’t fall as low as we previously thought for this year. However, it is unlikely to present a hurdle to further easing by the Reserve Bank, in the form of an expansion of its large-scale bond purchases."