Consumer Price Index: Inflation is coming down: How low did it go?

ANZ economists are tipping a quarterly rate of 0.8% for an annual rate of 2.3%. Westpac and ASB see a rate of 0.7% for an annual rate of just 2.2%.

Westpac senior economist Satish Ranchhod warned there were risks on both sides of inflation forecasts.

“On the downside, falling consumer spending could put an even bigger drag on prices for retail goods and some services.

“However, there is also the potential to see continued strength in the prices of items such as insurance and rates, which have contributed to stronger-than-expected non-traded inflation over the past two years.”

ANZ senior economist Miles Workman also struck a note of caution on high domestic inflation.

“Headline CPI inflation falling back into the 1-3% band may represent a key psychological threshold for policy makers and RBNZ watchers. But it should break the RBNZ with the bubble inflation that now do you have a double handle?” he said

“We don’t like to be partisan, but non-marketable inflation is still too high, meaning if the taps ring in the RBNZ building next week, they will be celebrating the progress of global disinflation as much as their own. Domestic deflation looks poised to continue, but there is still some way to go.”

ANZ economists expect non-negotiable inflation (driven domestically) to stand at 1.5% for the quarter and 5.2% for the year. That would be only a slight drop from the 5.4% annualized rate recorded in the second quarter.

Council rates were expected to be a key driver of quarterly inflation, with their biggest quarterly rise since 1987, Workman said.

Liam Dann is general business editor of the Herald of New Zealand. He is a senior writer and columnist, and also hosts and produces videos and podcasts. He joined the Herald in the year 2003.