This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
New Zealand’s CPI reading for Q3 was higher than expected with quarter on quarter figure at 0.9%, beating expectations of 0.7%.
Following a rocky road for New Zealand’s economy, analysts predicted the inflation to come in at 1.7% in Q3 up from last quarter’s 1.5%, but less than the central bank of New Zealand’s target mid-point of 2%.
The New Zealand dollar has been in a falling tend since May 2018, but upon the news the NZD rose 0.5% in response to the strong inflation data, sitting steady at 0.6600.
While the strong inflation comes as a surprise, analysts say it's unlikely to change the Reserve Bank of New Zealand’s outlook, and predict their decision to keep interest rates to a record low till 2020, will remain unchanged.
The higher inflation in Q3 is due to higher fuel prices and weaker currency, with a 19% on-year jump in petrol prices in September, recording the highest annual increase since 2011.
Stats NZ said this was the first-time petrol prices had risen for four consecutive quarters since September 2008, during the global financial crisis.
The falling exchange rate also made imports more expensive for New Zealand tech consumers, contributing to a 2.6% rise in September’s 2018 quarter, including audio-visual equipment, televisions, cameras and home theatre systems.
A first for the tech sector since 2016.
.jpg)
