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Michael Gordon, Senior Economist at Westpac, notes that New Zealand’s consumer prices rose 0.4% in the June quarter, lifting the annual inflation rate from 1.1% to 1.5%.

Key Quotes

“Fuel and food prices made the biggest contribution, but a range of ‘core’ measures of inflation also rose modestly on an annual basis.”

“The details were firmer than the headline. Tradables inflation was soft, partly due to some unusual factors, but the more persistent non-tradables component was stronger than  expected.”

“Annual inflation rose from 1.1% to 1.5%, and we expect a further increase into year-end. However, this partly reflects soft CPI outturns a year ago; the underlying trend is more of a gradual pickup in inflation pressures.”

“We continue to expect the Reserve Bank to keep the OCR on hold for some time.”