NZ: Monthly Inflation Gauge fell 0.3% in April - ANZ

In April, prices in the ANZ Monthly Inflation Gauge of NZ fell 0.3% m/m for a third consecutive month and the annual increase is now 2.6% versus 3.0% last month, points out Miles Workman, Economist at ANZ.

Key Quotes

“The April ANZ Monthly Inflation Gauge fell 0.3% m/m (+2.6% y/y). It has been somewhat of a rollercoaster ride in 2018. January saw the Gauge lift 0.8% m/m – the largest rise in three years, boosted by tobacco prices; in February, fees-free tertiary education helped pull the Gauge down 0.3%; March featured a broad-based price reduction; and in April, higher rents (+0.1%) and vehicle insurance (+1.6%) were no match for seasonally lower prices for accommodation services (-5% m/m) and domestic air transport (-12% m/m). The index level is now unchanged from December 2017.”

“Prices rose for 9 of the 36 subcomponents in April, but these lifts were small, contributing just 0.06% to the m/m change all up. Conversely, a fall in just 3 categories contributed -0.33% pts.”

“Outside of housing, evidence of broadening inflationary pressures remains elusive, with our Underlying Ex-housing Gauge up just 0.8% y/y in April. Other indicators of core inflation have remained stagnant, and wages managed to squeeze out only a small gain in Q1. That said, we continue to expect a gradual lift in wages will support a modest broadening in inflationary pressures in time, with the Reserve Bank expected to lift the OCR from mid2019. But there is certainly nothing in this data to suggest any urgency.”