NZ: Monthly Inflation Gauge rose 0.6% m/m in August - ANZ

Sandeep Kanihama FXStreet Contributor

New Zealand economy’s ANZ Monthly Inflation Gauge rose 0.6% m/m (+2.8% y/y) in August and the result was driven largely by a 13.3% m/m rise in accommodation services, which made a 0.49%pt contribution, notes the research team at ANZ.

Key Quotes

“This reflects a strong month for prices of overseas accommodation prepaid in New Zealand (a recent addition to the accommodation component of the CPI basket), likely reflecting a mix of recent NZD weakness and seasonal demand.”

“In annual terms, the Gauge picked up a little momentum in August, accelerating 0.3%pts to 2.8% y/y.”

“The real test will be over the next year or so, once the economy has navigated some of the policy-induced noise, with growth in housing-related prices continuing to wane at the same time as the impact of weaker business investment and employment intentions plays out.”

“While non-tradables inflation appears to be holding up in the near term (consistent with the Reserve Bank’s forecast), our expectation is that economic activity will be insufficient to sustain non-tradables inflation at (or slightly above) the 3% annual rate needed to keep headline inflation around 2% over the medium term.”

Author

Sandeep Kanihama

FXStreet Contributor

Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.

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