22 May 2013

Inflation expectations fall

7:26 am on 22 May 2013

Inflation expectations in the May survey fell to their lowest level since December 1999.

Businesses now expect inflation in two years' time will be 2.1%, down from the 2.2% they expected three months ago.

An economist at ASB Bank, Jane Turner, says the survey is a key measure for the Reserve Bank.

"At two years ahead it's in that policy window area where the Reserve Bank can influence future inflation expectations."

Ms Turner says the inflation expectations are sitting at the mid point of the bank's target band of 1% to 3% range suggesting they are anchored and that it is a comfortable position for the bank to be in.