27 Feb 2013

CPI expectations ease in March quarter

10:06 am on 27 February 2013

Inflation expectations have eased in the three months to March, due to a slow recovery.

A quarterly survey by the Reserve Bank shows business managers forecast annual inflation to average 1.68% over the coming year, compared with 1.8% in the previous survey.

Two-year inflation expectations, which the Reserve Bank pays particular attention to, edged down from 2.27% to 2.17%.

Reserve Bank Governor Graeme Wheeler has agreed with the government to keep inflation around the midpoint of the 1% to 3% target band.

ASB economists say the slight decline is unsurprising given a recent run of weaker-than-expected inflation figures, indicating firms are finding it difficult to put up prices despite modest wage growth.