The Reserve Bank of New Zealand (RBNZ) released its Sectoral Factor Model Inflation gauge for the second quarter of 2022 this Monday.

The gauge accelerated to 4.8% YoY in Q2 2022 vs. 4.6% seen in Q1 (revised sharply higher from 4.2%).

In early Asia, New Zealand’s Consumer Price Index (CPI) rose 1.7% QoQ in the second quarter, beating expectations of a 1.5% increase. Meanwhile, the annualized inflation surged to a 32-year high of 7.3% vs. 7.1% expected.

FX Implications

The Kiwi dollar is little moved on the RBNZ inflation gauge, as NZD/USD is consolidating the latest rally triggered by the above forecast Q2 CPI release.

At the time of writing, the kiwi is trading at 0.6188, up 0.49% on the day.

About the RBNZ Sectoral Factor Model Inflation

The Reserve Bank of New Zealand has a set of models that produce core inflation estimates. The sectoral factor model estimates a measure of core inflation based on co-movements - the extent to which individual price series move together. It takes a sectoral approach, estimating core inflation based on two sets of prices: prices of tradable items, which are either imported or exposed to international competition, and prices of non-tradable items, which are those produced domestically and not facing competition from imports.

NZD/USD Technical levels to watch