-Chris Pike, Statistics New Zealand
While New Zealand's inflation rose slightly in the three months ending June 30, it remained well below the RBNZ's target range of 1% to 3%, putting greater pressure on the central bank to proceed with the easing cycle it initiated last month. New Zealand consumer prices climbed 0.4% in the second quarter, as weaker currency and higher global oil prices increase the cost of petrol, while housing continues to get more expensive. The reading came slightly lower than a 0.5% gain expected by economists, but in line with the central banks' estimates made last month. Measured on an annual basis, the consumer price index rose 0.3% in the second quarter, Statistics New Zealand said.
Meanwhile, business and household sentiment is waning as the economic outlook deteriorates. Consumer confidence declined to the lowest level in almost three years this month, according to ANZ. Most economists now expect a rate hike by the RBNZ as early as next week. Last month the central bank slashed the official cash rate to 3.25%, its first cut in four years, due to sluggish inflation and an expected decline in demand. Data released shortly after the RBNZ's decision showed the economy expanding only 0.2% in the March quarter, much weaker than the 0.6% GDP growth rate predicted by markets.
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