RBNZ to move on low inflation back drop? – ANZ

By FXStreet FXStreet (Guatemala) – Analysts at ANZ noted that headline consumer prices fell 0.5% in the December quarter (-0.2% sa), weaker than the market consensus and the December MPS pick of a 0.2% fall.

Key Quotes:

“Annual CPI inflation fell to 0.1%, the lowest since September 1999, the fifth consecutive outturn below 1% and the 17th successive outturn below 2%.
Lower tradable prices dominated the result (down 1.8% q/q, -1.2% sa, -2.1% y/y), falling by more than expected. Seasonality and lower global commodity prices played a major role, with seasonally lower food prices (down 2.1% q/q) and the 7% fall to petrol prices apparent.”

“There were also few signs the disinflationary impact of past NZD strength was abating, with falls for prices for motor vehicles, telecommunications equipment, package holidays, household textiles and appliances. So far, competitive pressures were proving an effective inflation suppressant, with Statistics NZ reporting that 14% of retail items were discounted in Q4”

“There were still some increases – notably international airfares – but these look to be short-lived given the impact of lower oil prices and increasing competition.”

“Non-tradable prices rose 0.5% q/q% (+0.5% sa), with annual inflation rising to 1.8% y/y. This was stronger than both our and the RBNZ pick …read more

Source:: FX Street