A prominent economist says New Zealand’s annual inflation likely rose at least 7 percent in the March quarter, more than double the Reserve Bank’s (RBNZ) target and remaining at close to a 30-year-high.
At its second 2023 rate review earlier this month, the RBNZ remained surprisingly aggressive with its policy – setting the official cash rate higher than the market expected.
The March quarter’s consumer price index likely rose at least 7 percent from a year earlier, according to independent economist Cameron Bagrie.
In the December quarter, the CPI rose 7.2 percent.
“We’re going to get some figures in a couple of days and it’s going to show headline inflation up around 7 percent,” Bagrie told AM on Tuesday. “There’s certainly a lot more pain around the corner in the next 12-24 months,” he said, referring to a new report showing New Zealand was expected to enter a longer and deeper recession than initially forecast.
The Government’s statistics agency will release the March quarter CPI data on Thursday morning.
Economists at ASB also forecast annual inflation accelerating to 7.2 percent. ASB tipped quarterly inflation to rise by 1.8 percent.
“To add to this, the annual rates of core… and non-tradable inflation are also likely to be at or near highs not seen in decades,” the bank said in its Economic Weekly report.
“We expect two-thirds of this quarterly increase to be made up of surging food prices as well as increased housing costs. The other third will be generalised price rises.”
Figures released on Monday showed food prices were 12.1 percent higher than this time last year, largely driven by grocery costs.
“There is no doubt that these figures will be an influential factor for the RBNZ’s monetary policy decision in late May,” ASB said of the CPI. “For the RBNZ to call a halt to OCR increases in May, it would need to be confident by then that inflation is likely to be contained more easily than it has been banking on in its recent forecasts.”