Data published by Statistics New Zealand showed that in the 4th quarter, the CPI increased by 0.5% QoQ, as expected, after an increase of 1.8% QoQ in the 3rd quarter. Housing and utility prices increased by 0.8% QoQ, slowing compared to Q3 (+1.7% QoQ), while food prices fell by 1.2% QoQ after rising by 0.9% in Q3. The cost of miscellaneous goods and services increased by 1.5% QoQ, as in the 3rd quarter.
In annual terms, the growth of consumer inflation slowed to 4.7% (the lowest value since the 2nd quarter of 2021) from 5.6% in the 3rd quarter. The latest change coincided with economists' forecasts. But although inflation continues to approach the central bank's target range (1%-3%), it remains very high. Housing and utility prices rose by 4.8% after an increase of 5.3% in the 3rd quarter, and food prices increased by 5.7% compared to +8.8% in the 3rd quarter. Meanwhile, price growth for alcoholic beverages and tobacco products accelerated to 8.1% from 7.4% in the 3rd quarter.
The data also showed that non-tradable inflation increased by 1.1% QoQ and by 5.9% per annum, while tradable inflation fell by 0.2% QoQ and rose by 3% per annum. Economists noted that non-tradable inflation remains too high and may cause some concern to the central bank. The Reserve Bank of New Zealand (RBNZ) raised its key interest rate to 5.5% in mid-2023 to try to ease inflationary pressures. In November, the RBNZ predicted that inflation in the 4th quarter would be 5.0% per annum and that the inflation rate would return to the target band by the second half of 2024. Overall, the latest inflation data has strengthened the confidence of most economists that interest rates have reached their peak and that the discussion should turn to the timing of interest rate cuts.