Domestic data could signal inflation stall to the Reserve Bank

In fact, ASB chief economist Nick Tuffley says broad-based price rises in some sectors of the economy could indicate to the RBNZ a drop in inflation is stalling.

Although the country’s inflation figures are the lowest since June 2021 at 4%, most of the drop has been from imported goods inflation. Tradables inflation fell to 1.6% - well below the 2.2% some economists were predicting.

However, domestic inflation came in at 5.8%, 0.5% above the RBNZ’s February estimate. It is not enough for the RBNZ to even glance at a lower OCR.

Housing and household utilities were the biggest contributors to the annual inflation rate, Stats NZ says. This was due to rising prices for rent, construction of new houses and rates. Rents rose 4.7% in the 12 months to March this year quarter, while construction of new houses and rates increased 3.3% and 9.8% respectively.