Strategists at TD Securities (TDS) offer a brief preview of the upcoming release of the quarterly consumer inflation figures from New Zealand, due during the Asian session on Thursday.

Key quotes:

“We expect Q1'23 CPI inflation to rise to 1.7% q/q (Q4'22: 1.4%), slightly below the RBNZ's 1.8% q/q forecast but above market consensus at 1.6% q/q. This translates to an annual forecast of 7.1% y/y in between cons +7.0% and RBNZ at 7.3%. We see upside risks to our forecasts from higher food prices and homebuilding costs following weather related incidents.”

“For Q1, housing costs and food are likely to be the major drivers of inflation while the annual increase in tobacco excise is another contributor. Lower fuel prices should help to provide some offset though this is likely to be a temporary relief given the recent OPEC production cuts. Overall, our forecasts suggest that inflation is too persistently high for the RBNZ's liking and warrants another 25bps hike at the May meeting, bringing the OCR to a terminal rate of 5.5%.”