The New Zealand Consumer Price Index (CPI) showed significant easing in the second quarter of 2024. This decline was more pronounced than analysts had anticipated. The focus key phrase for this article is "New Zealand CPI eases."
In the three months ending June 30, CPI increased by 3.3% year-on-year. This was below the forecasted 3.5% rise and a noticeable drop from the previous quarter's 4% increase. Additionally, quarter-on-quarter CPI rose by only 0.4%, missing expectations of 0.5% and lower than the prior quarter's 0.6%.
The softer CPI readings were mainly due to decreased spending on discretionary and recreational items. Consumers spent less amid high interest rates and inflation pressures. This reduction in spending highlighted a cooling economy, suggesting that the Reserve Bank of New Zealand (RBNZ) might consider cutting interest rates soon.
The CPI remained above the RBNZ's target range of 1% to 3% annually but is expected to fall within this target by the second half of 2024. The RBNZ indicated in their July meeting that interest rate cuts would depend on continued easing of inflation. Wednesday's CPI data bolstered expectations that the central bank might start reducing rates later this year.
Analysts at Westpac believe that more signs of easing inflation could prompt the RBNZ to cut rates as early as November. Following the CPI announcement, the New Zealand dollar strengthened slightly, with the NZDUSD pair rising by 0.2%.
New Zealand CPI eases more than expected in Q2 2024. Read on for insights into economic implications and future projections.
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