New Zealand Q3 Inflation Cools More Than Expected as Annual Rate Falls to 3.7%

New Zealand's consumer price index rose 0.7% in the third quarter from the prior quarter, coming in below the consensus forecast of 0.8% and sharply lower than the 1.5% gain recorded in Q2. On an annual basis, CPI climbed 3.7%, also undershooting the poll estimate of 3.8% and marking a continued deceleration from the 4.1% reading in the previous year-over-year comparison.

Breaking down the components, tradeable CPI rose just 0.2% quarter on quarter, unchanged from the estimate and a dramatic slowdown from the 2.7% pace in the prior quarter, reflecting easing imported price pressures. Non-tradeable CPI, which tracks domestically driven inflation, rose 1.0% on the quarter against an estimate of 1.2%, and 3.3% on an annual basis, suggesting domestic price pressures are also softening but remain more persistent than external ones.

The softer-than-expected print reinforces the disinflationary trend in New Zealand and is likely to keep pressure on the Reserve Bank of New Zealand to continue easing monetary policy, with annual inflation now well below the 4.1% pace seen just one quarter prior.