New Zealand’s consumer price inflation came in slightly above expectations in the fourth quarter of 2024, rising 0.5% quarter-on-quarter and holding steady at 2.2% annually.
This is marginally above the RBNZ’s forecasted 2.1% annual CPI level but still within the central bank’s target inflation range.
Key Takeaways:
- Core inflation remained elevated at 3% annually, indicating persistent underlying price pressures
- Non-tradeable inflation eased to 4.5% annually from 4.9% in Q3, suggesting domestic price pressures are gradually cooling
- International air transport and second-hand car prices were major contributors to the quarterly increase
Transportation costs played a significant role in the quarterly figures, with international air transport prices jumping 6.6% and second-hand car prices rising 4.7%. These increases were partially offset by an 11.5% drop in vegetable prices and a 3.7% decline in confectionery and snacks.
Housing costs continue to exert pressure on the inflation basket, with rental prices increasing 0.8% for the quarter and 4.2% annually. However, the RBNZ noted that December rental data was excluded due to system upgrades at the Ministry of Business, Innovation and Employment.
Link to official New Zealand CPI Report for Q4 2024
While domestic inflation pressures are showing signs of easing, underlying metrics remain elevated while tradeable inflation is stuck in negative territory at -1.1% annually. This combination of sticky core inflation and weakening currency dynamics likely leaves the RBNZ enough room to continue its easing cycle.
Market Reaction:
New Zealand Dollar vs. Major Currencies: 5-min
Overlay of NZD vs. Major Currencies Chart by TradingView
The New Zealand dollar weakened broadly following the release, with the NZD/USD falling approximately 0.25% in the hours after the announcement. The muted market response suggests the data largely aligned with broader expectations despite the slight upside surprise.
