Rising inflation adding to RBNZ’s headache

Inflation is expected to break through the RBNZ’s top line of 3% in the next quarter, intensifying its headache.

The central bank meets on 9 July to review the OCR and BNZ research head Stephen Toplis says there is every chance there will be a pause on recent drops.

Toplis’ comments come after Stats NZ latest data in the Selected Price Indexes (SPI) showing food prices rose 4.4% in the 12 months to May.

He says in the past the RBNZ has implied it would look through any short term uptick in prices especially if they were shock driven. But equally, it was clear, when it released is May Monetary Policy Statement it was nervous about rising inflation expectations.