Annual inflation has fallen to 3.3% after consumer prices rose just 0.4% in the June quarter, according to data released by Statistics New Zealand on Wednesday. This marks a major milestone in the Reserve Bank’s war on inflation, with the headline rate now the lowest it has been since inflation first left the target band in June 2021. This latest release will be more reassuring for the policymakers with both imported and local inflation easing. More moderate prices in restaurants, local holiday accommodation, and retail shops also contributed to an improved headline inflation rate. While the significant decline in headline inflation appears to set the scene for an easing in monetary policy, the RBNZ is unlikely to act unless it sees core inflation falling as well.
