Third quarter CPI from New Zealand data results.

A shade above expectations for both the q/q and y/y, sending the NZD up a few points

+0.3% q/q

  • expected +0.2%
  • prior was +0.4%

+0.4% y/y

  • expected +0.3%
  • prior was 0.4%


From StatsNZ:

Annual prices increase 0.4 percent

  • The CPI increased 0.4 percent in the year to the September 2015 quarter, following a 0.4 percent increase in the year to the June 2015 quarter.
  • Housing and household utility prices were up 2.7 percent in the year, with higher prices for newly built houses excluding land (up 5.5 percent), housing rentals (up 2.3 percent), and local authority rates (up 5.9 percent). "The annual increase was influenced by housing-related prices, particularly in Auckland," Mr Pike said. "Auckland prices for new houses excluding land were up 8.5 percent, and housing rentals and rates also increased by more than the national average."
  • The CPI measures the rate of price change of goods and services purchased by New Zealand households.


Housing-related factors being cited as a big contributor to the higher than expected (but not by very much) inflation reading. The NZD is up a few points, around 20 or so as I update, on the data. To the extent that this higher inflation diminishes the probability of an RBNZ rate cut (... if you are thinking "Really??? There is a yawning chasm between the RBNZ inflation target and this result, how much will this diminish rate cut expectations?" ... Well, I'm with ya!) it should be an NZD supportive print.

Note in the details to this print:

  • Non-tradeables was flat, 0.0% change q/q. This is VERY low (its +1.5% y/y ... also low), lowest since 2001
  • Tradeables (those impacted by the currency) +0.7% q/q


Added ... Westpac response (in very brief):

  • CPI slightly stronger than we, and the market, anticipated
  • Annual non-tradables inflation fell to 1.5%, the lowest annual rate since December 2001, and was slightly weaker than expected. This reflects genuinely subdued inflation domestic inflation pressures as well as the decline in ACC levies
  • Tradables prices were up 0.7% in the quarter, and were slightly stronger than expected ... suggests that the falling exchange rate is indeed passing through to NZ inflation
  • However, part of the surprise relative to our forecast probably represents timing issues
  • At first glance, we are inclined to reduce our quarter CPI forecast by 0.1% after today's figures.
  • Our long-held view has been that low inflation will force the Reserve Bank to reduce the OCR below 2.5% in 2016. By contrast, the RBNZ argues that the lower exchange rate will prompt sufficient inflation, meaning the OCR will only need to fall to 2.5%. ... Today's data leans more in favour of the RBNZ's view, but only slightly
  • Inflation outlook for next year remains very subdued. Consequently, today's surprise is not sufficient to dissuade us from forecasting a 2.0% low-point in the OCR