Inflation has been growing everywhere as large producers and suppliers keep increasing prices and New Zealand hasn’t been an exception, despite being a month or two behind the US and Europe. CPI inflation grew by 1.8% in Q1 and by 6.9% YoY. Q2 is expected to come at 1.5% but Statistics NZ’s CPI experts don’t expect it to avoid the 7% milestone this time.

“Uncertainty remains high, with global commodity prices being buffeted by geopolitical developments, and trading partner inflation continuing to surge,” said ANZ’s CPI preview, which is forecasting annual inflation to come in at 7.1%. An inflation reading of 7% or more would make it the highest in more than three decades.

The breadth and strength of price rises has been unrelenting with global commodity prices driven by geopolitical developments, such as the Ukraine war. Food prices have risen 1.6 percent in the quarter, on the back of more expensive groceries, fruit and vegetables; housing and construction costs have risen more than 3 percent, and fuel prices were up more than 6 percent.

New Zealand Q2 CPI Inflation Report

• New Zealand CPI Q2 1.7% QoQ vs 1.5% expected
• Q1 CPI inflation was 1.8%
• CPI YoY came at 7.3% (highest in 32 years) vs 7.1% expected
• Previous CPI YoY was 6.9%

The Reserve Bank of New Zealand is locked in to further rate increases ahead. Last week’s manufacturing PMI was a bit of a shock and showed there is a toll being taken on the economy.

RBNZ Inflation Model

NZD/USD Live Chart