The signal on underlying inflation in New Zealand's June quarter consumer price index (CPI) data was mixed and isn't likely to budge the Reserve Bank of New Zealand (RBNZ) from its policy stance, with the trimmed mean and weighted median measures accelerating, but the ex-fuel and energy measure slowing, ANZ said in a note on Tuesday.
New Zealand's annual consumer inflation increased by 4.1% in the June quarter, up from a 3.1% increase in the 12 months to the March quarter. Tradable inflation accelerated 2.4 percentage points to 4.9% year-over-year.
The bank reiterated its forecast of 25 basis point rate hikes at the central bank's September and October meetings.
The June quarter could have marked the peak in annual inflation following the oil price shock; however, oil prices are rising again, and the RBNZ is unlikely to stop worrying about potential spillovers.
Gradual progress on non-tradable inflation and broadly contained core inflation is also unlikely to impact the monetary policy committee's policy assessment.
The committee will be concerned about the effect of the fuel shock on inflation expectations and firms' pricing behavior. Administrative price inflation is likely to remain elevated for an extended period. However, New Zealand's economy may still have ample disinflationary spare capacity.