WELLINGTON: New Zealand inflation is seen nudging higher in the first quarter, which would confirm price pressures in the strongly growing economy are accumulating, with the central bank set to steadily raise rates over the next two years.
A Reuters poll expects the consumer price index to have risen 0.5 percent in the three months to March 31, taking the annual print to 1.7 percent, the highest since the end of 2011.
"Inflation turned a corner last year, and is now increasingly back in focus given signs of capacity pressures," said ASB Bank economist Christina Leung.
Graeme Wheeler, Governor of the Reserve Bank of New Zealand, has made it an article of faith since his appointment in September 2012 to anchor inflation around 2 percent, the midpoint of its long-established 1 to 3 percent target band.
The RBNZ started its rate-tightening cycle last month and is now committed to a series of rises to stay on top of growing inflation pressures.
On that basis, almost regardless of the precise quarterly number, the bank is expected to remain alert and on the front foot to contain price pressures in an economy which is seen growing by as much as 4 percent this year.
The inflation reading for the first quarter is expected to reflect a series of one-off factors - the annual rise in alcohol and tobacco taxes and student fees, which will countered by the usual seasonal downward adjustment in international air fares and lower food costs.
The strong New Zealand dollar is also expected to have helped keep down the price of imported goods, the so-called tradables, while home-grown inflation - non-tradables such as housing and building, and power costs - are growing strongly.
Comments
Comments are closed.