New Zealand inflation data for the October - December quarter of 2023

New Zealand q4 2023 inflation data

Inflation in NZ is subsiding, a welcome relief for consumers and the Reserve Bank of New Zealand.

Its not all good news though, domestic inflation, measured by 'non-tradeables' has come in at a whopping 5.9% y/y

  • +1.1% q/q, way above expected at 0.8%

The RBNZ has basically zero control over tradeable inflation (more on this in the details below). But non-tradeable inflation is something the Bank can address, using its (basically only) tool of monetary policy. High non-tradeable inflation argues for continued tight monetary policy.


"Tradable" and "Non-tradable" inflation are terms used to describe different aspects of inflation based on the nature of the goods and services involved.

  1. Tradable Inflation:

    • Definition: Tradable inflation refers to inflation in goods and services that are traded internationally.
    • Examples: Commodities like oil, metals, agricultural products, and manufactured goods like electronics and automobiles.
    • Characteristics: Prices of tradable goods are often influenced by global market conditions, exchange rates, and international supply and demand dynamics. For instance, if the price of oil increases globally, it will lead to tradable inflation in countries that import oil.
    • Impact: The inflation of tradable goods can be significant for countries that rely heavily on imports or exports. Changes in exchange rates can also have a substantial impact on tradable inflation.
  2. Non-tradable Inflation:

    • Definition: Non-tradable inflation refers to inflation in goods and services that are not internationally traded.
    • Examples: Services like healthcare, education, and local utilities, as well as goods with high transportation costs relative to their value, or those that are typically consumed where they are produced.
    • Characteristics: Prices of non-tradable goods and services are primarily influenced by domestic factors such as local wage levels, property rents, and domestic policies. These prices tend to be more stable compared to tradable goods, but can vary significantly from country to country.
    • Impact: Non-tradable inflation is more directly controlled by domestic monetary and fiscal policies. It is less subject to external shocks but can be influenced by domestic factors like labor market conditions and local regulatory changes.

In summary, tradable inflation is primarily driven by international factors and market conditions, whereas non-tradable inflation is driven by domestic economic conditions and policies.