Kiwis Get Another Rate Hike, Despite Oil Price Falls!

Specifically, recent energy cost increases could still flow through to consumer prices, Non-tradable inflation remains high, with the risk that administered (i.e. government-set) price inflation could remain strong, Firms could become more sensitive to cost increases against a backdrop of elevated inflation and lift prices in response; Firms might also be inclined to slip through additional price increases given the ‘cover’ of the energy-related price shock; and in contrast, if an environment of weak demand remains, some businesses may not be able to readily pass on cost increases to customers. And the sting in the tail: With inflation still above target […]