16 Jan 2012

Lid on inflation

8:46 am on 16 January 2012

A sharp fall in food prices and the high New Zealand dollar are likely to have kept a lid on inflation in recent months.

The Consumer Price Index, which is a gauge of inflation, is due to be issued on Thursday.

According to a Reuters poll, most economists expect the CPI to have risen 0.4% in the three months to the end of December, which is the same increase recorded in the September quarter.

ASB economist Jane Turner is picking inflation to have risen by 0.2% in the quarter - which will bring the the annual rate of inflation down to 2.4%.

She says inflation will rise in 2013, depending on when the reconstruction of Canterbury gets underway.

And with problems in Europe showing no real signs of being resolved any time soon, Ms Turner says the Reserve Bank is likely to leave the official cash rate at very low levels for the rest of the year.

Other data

The Food Price Index for December comes on Monday.

Electronic card spending for December and electronic card spending for the same month are to be issued on Tuesday as is a quarterly survey of business opinion by the New Zealand Institute of Economic Research.

The accommodation survey for November comes out on Wednesday, and the ANZ Roy Morgan Consumer Confidence index is on Thursday.