New Zealand: Sinking Consumer Prices Possibly a "Game Changer" for Kiwi Central Bank

The Independent just reported (Jan. 20) that "a bizarre creature that appears to be a fish with legs has been found in New Zealand."

But other recent news will likely have a far greater impact on the nation's nearly 4.5 million residents.

Here's a Jan. 20 headline from the Sydney Morning Herald:

New Zealand on cusp of 'outright deflation'

New Zealand saw a dramatic drop in consumer prices from 2011 through mid-2013. The nation's CPI then trended slightly higher through mid-2014, but has since slid below the mid-2013 bottom.

The latest consumer price data could prove to be a "game changer" for the Reserve Bank of New Zealand.

Read this excerpt from the above mentioned Sydney Morning Herald story:

New Zealand is on the cusp of annual deflation for the first time since 1999 after consumer prices dropped by a surprisingly large 0.5 per cent over the December quarter, in what could prove a "game-changer" for the Kiwi central bank, economists said.

The weak quarterly number pushed year-on-year CPI growth to a mere 0.1 per cent, well short of the Reserve Bank of New Zealand's (RBNZ) 2 per cent inflation target. …

A 1.8 per cent slump in tradeable prices drove the weak quarterly CPI number, particularly for vegetables and fuel, where a stronger Kiwi dollar over the period played a part in depressing prices. Domestic prices rose by 0.5 per cent, or by 1.8 per cent year-on-year, thanks to higher housing and airfare costs.

"With dairy prices still sliding, and 2 per cent inflation more elusive than ever, we expect a genuine easing bias" from the RBNZ next week, TD Securities economist Annette Beacher said.

You can read the entire story by following the link below:

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