In view of analysts at TD Securities, New Zealand’s Q3 CPI at +0.7% q/q exceeded market expectations for +0.6% q/q and the RBNZ's +0.5% q/q forecast, to put annual inflation at 1.5% y/y, easing from 1.7% y/y.

“The Q3 q/q increase was largely driven by a rise in fruit/vegetables and meat/fish/poultry prices +1.9% and 3.4% q/q respectively. Tradeables inflation rose 0.1% q/q but remained negative in annual terms -0.7%. This can be explained away by weak global prices. However non-tradeables inflation accelerated, +3.2%/yr, well up on the RBNZ's 2.7% y/y forecast. THis rise is the fastest since Q2 2009 and suggests capacity constraints are building. We don't expect this outcome is likely to deter the RBNZ from cutting next month as the Bank is likely to place more significance on growth disappointing the Bank's Aug MPS forecasts.”