Consumer Price Index has shown a modest rise in the March quarter, in line with market expectations, as showed by recent data from Statistics New Zealand. The CPI index measures the change in prices of goods and services.
Prices rose 0.8% QoQ in the first quarter, from 0.5% recorded during the last quarter of 2020. On a yearly basis, prices rose better than expected with an annual rise of 1.5% compared to 1.4% a year ago.
In the March quarter, transport prices rose 3.9% backed by higher prices for private transport supplies and services by 4.9% and purchase of vehicles by 2.6%. While food prices rose 0.6%.
The following chart shows quarterly changes in CPI since March 2017:
Annual inflation came at 1.5% during the year ended March 2021 as housing and household utilities increased by 2.6% and food prices increased 1.1%.
Trimmed CPI Index, which excludes food and energy, came at 1.7% YoY and 0.9% QoQ. This indicates that underlying inflation is generally higher than the 1.5 % overall increase in CPI.
Despite upbeat inflation data, the kiwi failed to escape negative pressure with NZDUSD holding around 0.7160. The pair is trading near a year-to-date low and is expected to continue gaining negative momentum until breaching 0.7200 levels.
Reserve bank of New Zealand expected inflation to move into the upper half of its 2-3% target range during this year, before slowing down in 2022. RBNZ believes that the expected rise in the inflation rate this year will be temporary, thus expecting monetary stimulus to continue in place.
New Zealand’s interest rate settled at 0.25% since the last rate cut in March 2020. RBNZ is expected to maintain the interest rate unchanged at current levels in its scheduled meeting in May.
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