Investing.com — New Zealand Consumer Price Index inflation eased more than expected in the second quarter, reinforcing expectations that the economy is cooling at a pace that could trigger interest rate cuts by the Reserve Bank.
rose 3.3% year-on-year in the three months to June 30, government data showed on Wednesday. The figures were softer than expected: 3.5% and an increase of 4% in the previous quarter.
Quarter-on-quarter growth rose 0.4%, below expectations of 0.5% and a slowdown from the previous quarter’s 0.6%.
The softer CPI figures were mainly due to slower spending on durable and recreational items, due to a decline in consumer spending under pressure from high interest rates and relatively high inflation.
The CPI reading still remained above the RBNZ’s annual target of 1% to 3%, but was now likely to fall within target in the second half of 2024, as forecast by the central bank.
The RBNZ had indicated at its July meeting that any rate cuts would be largely dependent on declining inflation. Wednesday’s reading reinforced expectations that the central bank will now have enough confidence to start cutting rates later this year.
More signs of easing inflation could give the RBNZ enough confidence to start cutting rates as early as November, Westpac analysts wrote in a recent note.
The New Zealand dollar firmed slightly after Wednesday’s reading, with the pair rising 0.2%.
