The RBNZ 'Sectoral Factor Model Inflation Gauge' is one of the bank's preferred measures of core inflation
Comes in at 1.7% y/y
- vs. 1.7% in Q3 of 2018
NZD had rallied up to now on the headline CPI data out earlier. The 'core' inflation model from the central bank not showing higher though. Unchanged result for Q4.
NZD down just a few points.
more to come
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The Sectoral Factor Model Inflation Gauge, in brief (summarised this from RBNZ info)
- Core inflation excludes one-off or highly volatile price movements
- Central banks use core inflation measures to assess what is happening to "underlying" inflation
- The Reserve Bank of New Zealand has a set of models that produce core inflation estimates
- The sectoral factor model estimates a measure of core inflation based on co-movements - the extent to which individual price series move together. It takes a sectoral approach , estimating core inflation based on two sets of prices: prices of tradable items, which are those either imported or exposed to international competition, and prices of non-tradable items, which are those produced domestically and not facing competition from imports
