NZ CPI: Subdued inflation, despite strong growth – HSBC

New Zealand's CPI inflation for Q2 was weaker than expected, slowing to 1.7% y-oy, down from 2.2% previously, notes the analysis team at HSBC.

Key Quotes

“Lower petrol prices were a key drag, but the weakness was more broad-based than just an oil price effect, with few signs that inflation pressures are spreading from the housing sector to elsewhere. Nontradable inflation slowed slightly, as did most of the measures of underlying inflation. The CPI excluding food and energy ran at 1.4% y-o-y, down from 1.6% in the previous quarter. Nonetheless, underlying inflation remains well past its trough and we expect most of the core measures will continue a gradual rise towards 2% over coming quarters. Today’s result does suggest, though, that the lift in underlying inflation is very gradual.”