The Consumer Price Index rose 0.2% in the June quarter, in line with our forecast but a touch below the market median and the RBNZ’s pick of 0.3%. Annual inflation slowed from 0.9% to 0.7%, the lowest in nearly 14 years. This was the fourth straight quarter where annual inflation was below the Reserve Bank’s 1-3% target range (though it will likely be the last, as we’ll discuss shortly).
Within that headline figure, there was a marked divergence between tradables – imported or import-competing goods – and non-tradables inflation. Tradable goods prices fell 0.5% over the quarter, leaving them down 1.6% on a year ago. This was the steepest annual fall since a 2.3% drop in the year to March 2004, which in turn was the biggest decline on record going back to 1989. Excluding a drop in fuel prices – which has been more than reversed so far in July – tradable goods prices were down 1.4% on a year ago.
Read the full report: FX Research
Westpac