December quarter inflation: 3.4%

So, annual growth in the consumer price index has fallen from 5.1% to 3.4%.  A sharp decline in petrol prices appears to have been the main driver of this drop off in annual price growth.

However, what about “inflation”.  Annual non-tradable growth increased to 4.3% – the highest level since late-2005.  If I wasn’t now expecting New Zealand economic activity to plummet in March (given poor consumer and business sentiment and temporarily lower trade incomes – note, these are temporary shocks 😉 ) I would be highly concerned about rate cuts.

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  • It’ll be interesting to see what happens to tradeables once the exchange rate drop starts feeding in.

  • Indeed – however, another substantial drop in the transport price index next quarter is on the cards.

    The labour market is going to be SO key for what happens – it unemployment doesn’t head over 4.9% (currently 4.2%) in the December quarter I would have to put a lot more weight on the idea that New Zealand isn’t struggling as badly as economists are stating. For what has happened to GDP, unemployment has been moving damn slowly …

  • John

    Maybe among the casualised workforce there is less work?

  • Phil

    “For what has happened to GDP, unemployment has been moving damn slowly …”

    Remember that the official unemployment figures exclude people who are not seeking employment. So if you’ve just lost you job, in the current environment…

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