Annual inflation accelerated from 3.1% and beat both market forecasts and the RBNZ’s 3.9% projection, supporting expectations for further policy tightening and lifting the New Zealand dollar near a six-week high.
New Zealand’s consumer price index rose 4.1% year on year in Q2, up from 3.1% in Q1 and slightly above the 4.0% consensus estimate as well as the Reserve Bank of New Zealand’s 3.9% projection. The stronger-than-expected reading, the highest since Q4 2023, kept inflation above the RBNZ’s 1% to 3% target range and reinforced market expectations of a 25-basis-point rate hike in September, with swaps also implying possible additional increases in October or December and again in February next year. The New Zealand dollar steadied around 0.582 near a six-week high after the data.