Liz Kendall, senior economist at ANZ, notes that the New Zealand’s ANZ Monthly Inflation Gauge rose 0.1% m/m in February, after a solid 1.1% m/m lift in January.
“Domestic airfares continue to be a top contributor to movements in the Gauge. Last month saw a sharp bounce (+22% m/m) after an astonishing fall in December (-18% m/m). Another lift higher this month (+5% m/m) contributed 0.1%pts to February’s print. It’s unclear how much Air New Zeeland’s recent announcement to cut airfares on a range of domestic routes will impact the Gauge, and Statistics NZ’s CPI for that matter, but domestic air travel may continue to be a headline act a little longer yet.”
“On a quarterly basis, prices for tobacco and cigarettes, rents and purchase of housing combined to push quarterly growth from the Gauge up to 0.9% q/q, after tracking in the 0.6-0.8% range over the past six months. Annual growth remains steady at 2.2% y/y. Excluding housing-related prices, the Gauge rose 0.1% m/m to be steady at 0.5% y/y.”
“It is possible that we see a further nudge higher in non-tradable inflation in the short term as a result of the previous build-up in capacity pressures. However, broad-based inflation is lacking and waning momentum in the economy means inflation pressures may soon peter out.”