New Zealand inflation in Q4/2022 lower than expected, central bank may slow interest rates

According to the New Zealand Bureau of Statistics, inflation in the fourth quarter of 2022 came in at 7.2% year-on-year, unchanged from the third quarter. While this is the highest level of inflation in nearly three decades, it is below the expectations of the Reserve Bank of New Zealand (RBNZ).

Economists had expected a rate of 7.1%, and the RBNZ had forecasted a rate of 7.5%. Consumer prices rose 1.4% quarter-on-quarter.

Inflation was driven by rising prices for housing and household utilities, as well as construction and rental housing. Prices for building new homes rose 14% in the 12 months to December 2022, following a 17% increase in the previous 12 months.

Despite the high inflation rate, the RBNZ may delay its monetary tightening plans due to the prospect of a recession and lower global price pressures. Investors are less confident that the central bank will raise interest rates by 0.75% again at their policy meeting on February 22, following a November hike.

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