As the first quarter of 2024 ticks by, New Zealand’s cost of living has apparently decided to take a minor yet noteworthy jog upwards. Q1 headline CPI increased by 0.6% quarter-on-quarter, a nudge above the RBNZ forecast of 0.4%. Year-on-year, the CPI jumped by 4%, just a smidge over the central bank’s 3.8% estimate.
However, it was lower than KiwiBank’s estimates, which expected a quarterly leap in Q1 from 0.5% to 0.8% and an annual increase of 4.2%. Similarly, ASB had called for a 0.7% bump in Q1 and annual inflation of 4.1%.
In addition, tradable inflation continued to retreat by -0.7% thanks to easing global goods prices and cheaper fuel—a welcome relief for anyone who’s been filling up lately. However, the sticky situation of non-tradable inflation isn’t going anywhere after a 1.6% increase compared to a predicted 1.2% quarterly increase by ASB.
What’s Next? Rate Cuts on the Horizon?
Looking ahead, ASB suggests headline inflation could dip below 3% by Q3 2024. But let’s not pop the champagne just yet—uncertainty is still the guest that won’t leave. With potential bumps in tradable inflation, the RBNZ might keep playing it safe, holding off on rate cuts until November 2024. So, keep those wallets tight and eyes on the horizon.
Oh, and if you caught wind of a wild 6.8% quarterly inflation figure bouncing around the newsfeeds, let’s just chalk that up to some overzealous typing. Fake news, folks. Keep calm and carry on.
