NZ CPI: Arrives as a miss at 0.1% Q/Q and a miss Y/Y at 1.5%


NZ Q1 CPI has been released and has disappointed on the yearly. Markets were expecting 0.3% q/q (0.1% prior) and 1.7% y/y (prior 1.9%)

  • Actual:  0.1% Q/Q vs 0.3% (0.1% prior) and a miss Y/Y at 1.5% vs 1.7% (1.9% prior).

A May easing, as some observers are expecting. could still on the cards with this data. 

New Zealand Q1 CPI has captured the market's full attention today considering the fluid pricing over the RBNZ’s cash rate (about 25% chance of a cut in May, 65% chance by June). 

Full report:

From the March 2018 quarter to the March 2019 quarter, the CPI inflation rate was 1.5 percent. Housing and household utilities increased 3.0 percent, with rentals for housing up 2.4 percent, construction up 3.9 percent, and local authority rates up 5.1 percent.

Alcoholic beverages and tobacco increased 4.2 percent, with cigarettes and tobacco up 7.7 percent. Communication prices decreased 3.7 percent, with telecommunication equipment down 23 percent.

Meanwhile, analysts at ANZ Bank noted that in an interview yesterday, RBNZ Governor Orr stated that the NZD is in its “happy space”, after making explicit reference to the high NZD in the March OCR Review:

"The NZD TWI has depreciated to 73.4 compared to 75 prior to the Review, and the 74 projected in the Feb MPS. But the RBNZ will be aware that the only reason the NZD is in its happy space is because there are 40bp of OCR cuts priced in over the next year. Any sign that the RBNZ is unwilling to deliver that could see the NZD back in an “unhappy space” again."

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