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.
“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.”