CPI rose 3.3% year-on-year in the three months to June 30, government data showed on Wednesday. The reading was softer than expectations of 3.5% and a rise of 4% in the prior quarter.
Quarter-on-quarter CPI rose 0.4%, less than expectations of 0.5% and slowing from the prior quarter’s 0.6%.
The softer CPI readings were driven chiefly by slower spending on discretionary and recreational items, reflecting a decline in consumer spending amid pressure from high interest rates and relatively high inflation.
The CPI reading still remained above the RBNZ’s 1% to 3% annual target, but was now likely to fall within the target in the second half of 2024, as forecast by the central bank.
The RBNZ had signaled during its July meeting that any cuts in interest rates will be largely dependent on easing inflation. Wednesday’s reading furthered bets that the central bank will now have enough confidence to begin trimming rates later this year.
More signs of easing inflation could give the RBNZ enough confidence to begin cutting rates by as soon as November, Westpac analysts had written in a recent note.
The New Zealand dollar firmed slightly after Wednesday’s reading, with the NZDUSD pair rising 0.2%.
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