New Zealand’s monthly price index, covering roughly half of quarterly CPI components, rose to 5.2% year-on-year in September, with energy a key driver. Inflation excluding petrol and diesel also picked up, moving from 3.2% in August to 3.6% year-on-year in September. The data point to renewed price pressure going into next week’s full CPI release.
Retail Demand Trends
At the same time, electronic card transactions suggest retail demand is weak. Seasonally adjusted spending slipped 0.4% versus August and was supported by higher petrol outlays, while spending excluding petrol fell 0.7%. As the figures are nominal, adjusting for price rises implies real consumption growth is likely clearly negative on a year-on-year basis.
Monetary Policy Outlook
With the Reserve Bank of New Zealand due to meet in around two weeks and markets pricing roughly an 80% chance of a rate hike, the policy outlook remains finely balanced between inflation and slowing activity.
