New Zealand’s CPI climbed 1.1% q/q in 2Q23, a tad lower from the 1.2% q/q in 1Q23, but above expectations for a gain of 0.9% q/q. Compared to the same period a year ago, CPI advanced 6.0% y/y, much lower than the 6.7% y/y reading in 1Q23, a tad above expectations for a gain of 5.9% y/y. 

Non-tradeable inflation, a closely-watched indicator of domestic price pressures, eased to 6.6% from 6.8% but was still higher than the Reserve Bank of New Zealand’s (RBNZ) projection of 6.3%.  

For now, we are keeping our OCR forecast at 5.50% for the rest of this year. We bear in mind, though, that the RBNZ has paused in previous tightening cycles before hiking again.